LIBIiAKY 

OF 


11  .      == 

Book  No. 

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1. 


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"'COLD  THE  STANDARD  OR  MEASURE  OF  VALUE-SILVER  SUBSIDIARY." 

Heading  in  Report  of  Director  oj  Mint,  Nov.  i,  1893. 


THE  STORY  OF  MONEY. 


A  SCIENCE  HAND-BOOK  OF  MONEY  QUESTIONS. 


BY 

EDWARD  C.  TOWNE,  B.  A. 


NEW  YORK. 
G.    W.  Dillingham  Co.,  Publishers. 


COPYRIGHT,  1900, 

BY 
EDWARD  C.  TOWNE. 


WEED-PARSON.S   PRINTING 
PRINTERS, 


A  FOREWORD. 


The  writer  of  the  chapters  embraced  in  the  pres- 
ent volume  was  not,  in  the  eight  years  following 
the  election  of  Harrison,  a  supporter  of  Harrison- 
McKinley  Republicanism,  but  from  the  beginning 
of  Mr.  McKinley's  presidency  he  has  seen  what 
seem  to  him  steadily  and  broadly  advancing 
grounds  for  the  belief  that  in  World-History  no 
American  ruler,  not  even  Washington  and  Lincoln, 
will  have  a  larger  name  or  a  more  indelible  record 
of  honor  than  the  sagacious,  judicious,  resolute 
administrator  of  national  magistracy  who  came 
into  power  through  the  magnificent  honest  money 
campaign  of  1896,  and,  under  whom  the  New 
World  Republic  of  Washington  and  Lincoln  has 
slipped  the  anchor  of  early  limitations  to  take  her 
inevitable  place  as  a  Power  second  to  none  in  the 
world. 

If  in  the  first  instance  this  volume  shall  help  to 
make  President  McKinley  our  dependence  for 
another  four  years  of  soundness  in  national 
finances,  and  of  demonstration  throughout  the 
world  of  American  quality  in  counsel  and  power 
in  action,  the  chief  aim  of  the  writer  will  have 
been  accomplished,  yet  with  the  hope  and  belief 
that  through  many  years  yet  to  come  the  book  will 
direct  the  student  to  sound  views  of  money  and  the 
voter  to  action  at  once  honest  and  honorable. 

[iii] 


"Gold  the  Standard  or  Measure  of  Value— Silver  Subsidiary." 

Heading  in  Report  of  Director  of  Mint,  Nov,   1,   1893. 


PRESIDENT  ANDREW  JACKSON— 'm  an  ages,  through- 

out  the  world,  the  standard  of  value.  There  is  no  fraud  in  gold ;  like  the 
honest  principles  of  the  founders  of  our  government,  it  is  unchangeable  and 
will  do  its  office  well  everywhere  and  at  all  times.  It  is  the  true  representa- 
tive of  the  principles  of  justice  and  equality  which  should  enter  into  every- 
thing that  operates  on  our  institutions  and  should  be  ever  insisted  on  by  the 
industrious  classes  as  the  actual  circulating  medium  to  bring  continually  to 
the  test  every  species  of  credit  currency  and  to  suppress  the  spurious  paper 
system  resting  on  no  solid  basis."  —December  26,  1836. 

SENATOR  JOHN   SHERMAN— "The  United  States  is  the  great 

gold  producing  country  of  the  world.  The  single  standard  of  gold  is  an 
American  idea." — January,  i8b8. 

"At  the  Paris  monetary  conference,  held  in  1867,  the  delegates  of  twenty 
nations  represented,  agreed  to  recommend  gold  alone  as  the  standard  of  value- 
The  United  States,  and  nearly  all  the  commercial  nations,  have  adopted  this 
standard." — January  16,  1874. 

SENATOR  W.  M.  STEWART—  "There  is  nothing  so  satisfactory 
as  the  real  measure  of  value  —  gold."— January  13.  1874. 

"Gold  is  the  universal  standard  of  the  world." — February  20,  1874. 

"  It  is  idle  to  talk  about  compromising  on  any  other  measure  of  value  ;  the 
world  will  not  accept  it."— June  //,  1874. 

SENATOR  JOHN  P.  JONES  — "The  sooner  we  comedown  to  a 
purely  gold  standard  the  better  it  will  be  for  the  country.  Gold  is  so  exact  a 
measure  of  human  effort  that  when  it  is  exclusively  used  as  a  money  it  teaches 
the  very  habit  of  honesty."—  April  /,  1874. 

HON.  LYMAN  J.  GAGE  — President  McKinley's  Secretary  of  the 
Treasury,  Hon.  Lyman  J.  Gage,  said,  after  reading  Dr.  Towne's  "  Story  of 
Money  "  : 

"  An  immense  gain  and  advance  over  any  previous  book  on  money." 

"  I  took  your  manuscript  with  a  view  to  glancing  over  it  and  reading  here 
and  there  the  more  interesting  portions,  but  I  became  interested  and  read 
every  line." 

41  It  is  very  clear  and  instructive,  and  it  seems  to  me  you  have  made  a  good 
distinction  between  the  possibilities  of  a  bi-metallic  standard  and  bi-metallic 
money." 

"The  information  you  have  gathered  into  the  book  as  to  the  course  of 
money  in  the  various  countries  is  very  valuable,  and  I  hope  you  will  be  able  to 
get  the  book  promptly  into  the  hands  of  the  public." 

"  I  feel  an  interest  in  the  work  and  would  be  glad  to  recommend  it  and  buy 
a  limited  number  of  copies." 

[iv] 


A  POLITICAL  NOTE. 


The  situation  created  by  the  legislation  of  last  March  has  been 
very  largely  taken  for  far  more  than  it  really  is.  It  declared  very 
justly  the  existence  of  the  gold  standard,  and  properly  provided  for 
the  redemption,  or  payment  in  gold,  of  United  States  notes  and 
treasury  notes,  amounting  to  about  $425,000,000,  but  it  did  not  simi- 
larly provide  for  making  as  good  as  gold  the  nearly  $580,000,000 
of  our  silver,  which  is  over  half  fiat  value.  The  moral  effect  of  the 
new  law  was  got  without  any  new  legal  effect  whatever.  It,  that 
is,  gave  no  new  means  for  carrying  out  the  gold  standard  system. 
The  House  bill  expressly  authorized  the  Secretary  of  the  Treasury 
"  to  exchange  gold  coin  for  any  other  money  issued,  or  coined  by 
the  United  States,"  whenever  it  should  be  necessary  to  do  this. 
This  fundamental  principle  of  the  gold  standard  system  was 
rejected  by  the  Senate,  leaving  the  law  no  better  than  it  was  before 
in  respect  of  the  means  of  acting  on  our  gold  standard  professions. 

This  might  involve  no  peril  if  our  administration  traditions  should 
become  thoroughly  fixed  in  the  direction  of  fidelity  to  the  gold 
standard.  But  with  Mr.  Bryan  made  President,  and  a  second  sil- 
ver fanatic  Secretary  of  the  Treasury,  payment,  in  47-cent  silver 
dollars,  of  both  interest  and  principal  of  the  bonded  debt  of  the 
United  States,  save  only  the  funded  two  per  cents.,  could  be  ordered 
at  once,  and  undoubtedly  would  be.  The  stand  thus  taken  for  sil- 
ver would  offer  ail  our  gold  in  exchange  for  silver  at  I  for  16 
when  it  is  worth  I  for  33.  No  instance  in  history  can  be  brought 
to  parallel  the  rascal  stupidity  of  a  scheme  involving  such  an  offer, 
and  with  progress  and  prosperity  so  immensely  advanced  since 
1896,  the  crash  of  a  Bryan  experiment  of  "  fool  fury  "  in  finance 
would  be  worse  than  all  the  costs  and  miseries  of  the  civil  war.  If 
any  possible  advantage  could  be  expected  from  either  free  silver 
legislation  and  administration  hereafter,  or  free  silver  clamor  now, 
the  madness  of  16  to  I  would  be  less  extreme  than  it  is.  But  no 
possible  advantage  can  be  imagined,  except  upon  a  basis  of  hood- 
lum ignorance  of,  or  rascal  indifference  to,  truth  and  fact.  It  might 
as  well  be  proposed  to  sell  wheat,  corn,  cotton,  and  beef  to  foreign 
markets  at  53  cents  on  the  dollar  below  the  market  price,  as  to  cut 

[v] 


VI  A  POLITICAL  NOTE. 

the  value  of  a  thousand  millions  of  gold  more  than  one-half  to  cus- 
tomers in  London  and  Europe.  The  silver  interest  alone  could  bet- 
ter afford  twice  a  President's  salary  for  the  rest  of  Mr.  Bryan's  life 
than  to  give  him  a  three  months'  opportunity  to  scuttle  the  whole 
fabric  of  American  prosperity  in  the  fashion  of  his  dictation  of  16 
l.o  i  to  the  political  convention  which  made  him  for  the  second  time 
a  presidential  candidate.  And  that  a  political  convention  hopeful 
of  success  upon  new  issues  for  which  something  can  be  said,  should 
bow  its  neck  to  a  needless,  senseless,  suicidal  millstone,  the  damn- 
ing infamy  of  which  is  only  matched  by  its  disastrous  folly,  is  the 
worst  illustration  in  our  history  of  convention  chances.  An  anti- 
imperialist  of  the  financial  competence  of  the  editor  of  the  New  York 
Evening  Post,  could  have  shown  the  Kansas  City  convention  in 
half  an  hour  that  the  way  was  more  than  open  to  them  to  accept 
the  gold  standard,  and  remove  the  question  of  standard  from  the 
list  of  campaign  issues.  The  only  issue  they  have  ever  needed  to 
make  is  that  of  Bimetallism  of  money,  and  it  is  the  world's  experi- 
ence, and  especially  American  experience,  that  this  can  be  better 
had  under  the  gold  standard  than  in  any  other  way. 

If  anything  were  needed  to  discredit  the  senile  sentimentalism 
of  Mr.  Boutwell's"  anti-imperialist"  cabal,  it  has  been  supplied  by 
their  accession  to  the  support  of  Mr.  Bryan.  The  scholar  in  Ameri- 
can history,  if  he  equally  understands  the  story  of  American  money 
and  the  origins  of  our  present  constitutional  position,  can  hardly 
conceive  a  catastrophe  more  appalling  than  that  invited  by  the 
hoodlum  and  rascal  scheme  for  giving  the  present  administra- 
tion of  our  national  affairs  an  overthrow  such  as  the  candidacy  of 
Mr.  Bryan,  in  the  name  of  the  money  of  the  fathers  and  of  the 
Declaration  of  Independence,  as  he  views  these,  must  imply. 

The  outcome,  in  constitutional  politics,  of  the  Declaration  of 
Independence,  was  a  wretched,  a  rascal,  a  ridiculous  failure  —  a 
government  which  Washington  described  as  "  half-starved,  limp- 
ing, always  moving  upon  crutches,  and  tottering  at  every  step." 
The  Revolution,  even  with  Washington  to  conduct  it,  would  have 
been  a  disgraceful  fizzle,  even  as  late  as  the  Yorktown  campaign, 
had  not  two  French  fleets,  a  great  number  of  French  troops,  and 
loans  of  honest  French  money,  come  to  the  aid  of  the  meagre  force 
led  by  Washington.  One  of  the  first  results  of  liberty  and  independ- 
ence gained  by  the  Revolution  was  an  armed  rebellion  in  western 
Massachusetts.  It  was  because  of  failure,  of  disaster  and  dishonor, 
under  the  Declaration  of  Independence,  and  the  scheme  of  union 
devised  by  the  zealots  of  liberty,  that  "  we  the  people,  in  order  to 


A   POLITICAL  NOTE.  vil 

form  a  more  perfect  union,  to  establish  justice,  ensure  domestic 
tranquillity,  provide  for  the  common  defense,  promote  the  general 
welfare,  and  secure  the  blessings  of  liberty  to  ourselves  and  our 
posterity,"  made  the  profoundly  radical  new  departure  which  an 
entirely  new  constitution  of  necessity  was. 

It  was  plainly  recognized  as  the  creation  of  imperial  sway  over 
the  sovereignty  of  the  states.  John  Adams  said  in  1786  that  his 
great  desire  was  "  to  see  rising  in  America  an  empire  of  liberty, 
and  a  prospect  of  two  or  three  hundred  millions  of  freemen." 
Dickinson  of  Pennsylvania  said,  that  such  "  an  extensive  and  well- 
established  empire  "  could  be  created  "  not  only  without  the  least 
danger  to  liberty,  but  liberty  will  be  thereby  better  secured." 
Washington  alone,  out  of  his  experience,  his  great  clearness  and 
breadth  of  intelligence,  and  a  weight  of  personal  influence  almost 
unparalleled,  saw  the  necessity  and  value  of  an  Imperial  Union, 
and  the  weakness  of  all  objections  to  it,  and  secured  the  accept- 
ance of  it  when  framed.  "  There  is  no  alternative,"  he  said, 
when  the  constitution  was  under  consideration,  "  between  the  adop- 
tion of  it  and  Anarchy.  All  the  opposition  that  I  have  yet  seen  is 
addressed  more  to  the  passions  than  to  reason." 

Yet  the  Constitution,  as  proposed  in  1787,  roused  an  anti- 
imperialist  agitation  of  the  most  strenuous  and  frantic  character, 
with  a  majority  of  the  public  leaders  and  of  the  people  carried 
away  by  it,  except  as  some  sections  felt  very  specially  the  needs 
of  commerce  and  as  Washington  and  Samuel  Adams  prevented 
Virginia  and  Massachusetts  from  taking  the  plunge  which  zeal  for 
liberty  was  thought  to  require.  Samuel  Adams,  "  the  helmsman 
of  the  Revolution,"  so  far  yielded  to  this  zeal  at  first  as  to  co-operate 
with  Elbridge  Gerry  and  Rufus  King  in  putting  Massachusetts  on 
the  side  of  hostility  to  the  idea  of  a  new  Constitution,  and  when 
the  great  instrument  had  baen  framed,  and  was  submitted  to  the 
states  for  acceptance,  Mr.  Adams  said,  "  I  stumble  upon  the  thresh- 
old," being  alarmed  at  the  idea  of  a  "  national  government  instead 
of  a  federal  union  of  sovereign  states."  As,  however,  the  moment- 
ous issue  was  debated  in  convention,  where  Rufus  King  appeared 
as  having  seen  new  light,  Massachusetts's  historic  patriot  let  go 
his  fears,  his  doubts,  and  his  excessive  zeal  for  liberty,  and  made 
possible  the  acceptance  of  the  Constitution,  which  Gerry  and 
Nathan  Dane  had  refused  to  favor.  He  set  an  example  which  an 
eminent  Senator  to-day  may  save  himself  by  following,  — as  he 
seems  determined  to  do. 

Richard  Henry  Lee,  who  is  forever  celebrated  as  the  mover,  in 


Vlll  A  POLITICAL  NOTE. 

the  Congress  of  the  colonies,  of  the  Declaration  of  Independence^ 
unhesitatingly  damned  the  Constitution  as  "  an  elective  despot- 
ism." In  Congress,  to  the  presidency  of  which  he  was  just  then 
elected,  he  fought  with  the  utmost  zeal  every  proposal  for  a  new 
Constitution,  and  when  defeated  there  he  restlessly  battled  against 
the  prospecl  of  "  an  American  empire,"  under  which  he  said  "  lib- 
erty would  become  an  empty  name." 

Patrick  Henry  voiced  his  anti-imperialism  with  passion  so  frantic 
as  to  violate  every  rule  of  order  in  debate.  He  declared,  with  hor- 
ror such  as  our  Atkinson-Boutwell-Winslow  zealots  of  liberty  can- 
not approach,  that  "  '  We  the  people  '  is  the  institution  of  one  great 
consolidated  national  government  of  all  the  states,"  and  George 
Mason,  a  patriot  of  Virginia  second  only  to  Washington,  spoke  for 
Henry  and  Lee  as  well  as  for  himself  when  he  said  that  "  a  general 
consolidated  government  is  one  of  the  worst  curses  that  can  befall 
a  nation,"  because  "  a  national  government,"  or  "  one  government 
over  a  very  extensive  country,"  cannot  exist  "  without  destroying 
the  liberties  of  the  people."  Benjamin  Harrison,  James  Monroe, 
John  Tyler,  and  William  Grayson,  lent  their  utmost  support  to  the 
same  view.  Yet  the  event  showed  that  George  Washington  was 
right  when  he  said  that  there  was  no  reason  for  that  view. 

Anti-imperialism  was  the  issue  of  the  civil  war,  as  honest  an 
issue  to  the  southern  states  as  the  imperialism  of  the  Constitution 
to  the  northern.  It  was  fought  out  and  settled,  and  the  acceptance 
by  the  south  of  imperialism  ranks  with  the  greatest  events  in  his- 
tory. Hysterical  revival  of  the  issue  by  a  handful  of  Massachu- 
setts sentimentalists,  who  have  so  far  taken  leave  of  all  decency  as 
to  come  very  near  the  penalties  of  treason,  and  whose  intelligence 
is  represented  by  readiness  to  assist  criminal  politics  and  financial 
hoodlumism  to  overthrow  at  once  the  prosperity  of  the  country 
and  the  best  administration  it  has  had  since  Washington's,  can- 
not have  serious  value,  save  as  it  may  be  one  torch  madly  put  to 
the  greatest  structure  of  liberty  and  welfare  the  world  has  ever 
seen. 

There  may  be  very  great  mistakes  in  the  course  taken  by  the 
administration  of  President  McKinley,  but  these  can  be  appealed 
against  without  any  senseless  harking  back  to  the  anti-imperialism 
of  Patrick  Henry,  R.  H.  Lee,  George  Mason,  and  Benjamin  Harri- 
son, and  not  less  without  standing  off  from  cordial  general  support 
of  the  national  administration. 


TABLE  OF  CONTENTS. 


CHAPTER  I. 

INTRODUCTORY. 

PAGE. 

1.  Better  knowledge  needed I 

2.  Bimetallism  not  rightly  explained 2 

3.  Shaw's  "  History  of  Currency  " 3 

4.  White's  "  Money  and  Banking  " 4 

5.  Dr.  F.  A.  Walker  on  money 7 

CHAPTER  II. 

THE  EARLIEST  ORIGIN  AND  IDEA  OF  MONEY. 

6.  Importance  of  the  story  of  money 10 

7.  Earliest  facts  of  money IO 

8.  Business  by  barter  in  Egypt n 

9.  Use  of  gold  in  Egypt 13 

10.  Silver  in  Egypt 14 

11.  A  gold-silver  compound 15 

12.  Earliest  money  of  Egypt  copper 15, 

13.  Babylonian  use  of  precious  metals 13 

14.  African  cowries  as  money '17 

15.  Indian  wampum  money 18 

16.  Intrinsic  value  the  basis  of  money 19 

17.  Regulated  barter  without  money 20 

18.  Abraham's  cash  transaction  in  real  estate 22 

19.  First  place  given  to  gold 24 

20.  The  gold  wedding  ring 26 

21.  The  Mosaic  sanctuary  use  of  gold 27 

22.  The  gold  of  Solomon's  Temple 28 

23.  Solomon  sold  bonds  and  bought  gold 30 

24.  Solomon's  demonetization  of  silver 30 

25.  The  vulgar  dispraise  of  gold 31 

26.  Anti-gold   fanaticism 32 

27.  Gold  as  a  rule  of  honesty 34 

[ix] 


X  TABLE   OF   CONTENTS. 

CHAPTER  III. 

THE  GROWTH   OF  MONEY:     ORIGIN   OF  STAMPED  COIN. 

PACK. 

28.  The  natural  history  of  money 35 

29.  The  essential  fact  of  money 36 

30.  Error  of  common  view 37 

31.  Early  Greek  making  of  money 38 

32.  Mr.  Grote  on  Pheidon's  coinage 42 

33.  Dr.  Curtius  on  Pheidon's  coinage 43 

34.  Growth  of  Greek  money 45 

35.  Religious  connection  of  coinage 49 

36.  Ancient  money  was  metal  by  weight 51 

CHAPTER  IV. 

THE  PRECIOUS  METALS  AS  THE  MATERIAL  OF  MONEY. 

37.  Unique  position  of  money  metals 53 

38.  Costly  not  the  same  as  precious 54 

39.  Platinum  not  good  for  money 56 

40.  Relative  position  of  silver  and  gold 57 

41.  The  gold-silver  compound 59 

42.  Earliest  current  money 59 

43.  What  makes  real  money 61 

44.  The  ultimate  standard 62 

45.  What  value  consists  in 62 

CHAPTER  V. 

THE  MAKING  OF  MONEY. 

46.  Metallism 64 

47.  Full  value  coin 65 

48.  Fiat  value  coin 66 

49.  A  necessity  in  cheap  coins 67 

50.  Full  value  metallism 68 

51.  Method  of  knowing  coin  values 69 

52.  Historic  basis  of  real  money 70 

53.  Silver  metallism 71 

54.  Gold  metallism 72 

55.  Gold  the  standard 74 


TABLE  OF  CONTENTS.  xi 

PAGE. 

56.  Special  case  of  silver 74 

57.  Gold  commands  confidence 75 

58.  The  chief  problem  of  metallism 76 

59.  The  true  interest  of  silver 77 

60.  Gold  bimetallism 79 


CHAPTER  VI. 

THE  USES  OF  MONEY. 

61.  Money  measures  value , 81 

62.  Money  regulates  exchange 82 

63.  Aristotle  on  money 83 

64.  Mr.  Horace  White  on  money 84 

65.  Money  as  a  standard  of  value 85 

66.  Labor  and  money 86 

67.  Money  and  credit 87 

68.  Money  as  capital 88 

69.  Money  and  banking 88 

70.  Value  of  sound  banking 89 


CHAPTER  VII. 

THE  MINTING  AND  ISSUE  OF  MONEY. 

71.  Coinage 90 

72.  American  mint  law 90 

73.  Origin  of  the  dollar 91 

74.  Failure  of  Hamilton's  dollar 93 

75.  President  Thomas  Jefferson  suspends  coinage  of  the 

silver  dollar 93 

76.  Hamilton's  gold  a  failure  also 94 

77.  Silver  thrown  out  by  President  Andrew  Jackson 95 

78.  Horace  White  on  "  The  Gold  Bill  "  of  1834 96 

79.  First  American  success  with  silver 98 

80.  The  silver  dollar  still  a  failure 99 

81.  The  legal  tender  paper  disaster  of  1862 100 

82.  How  Mr.  Chase  broke  the  banks 101 

83.  Seventeen  years  of  paper  money 102 


xii  TABLE   OF   CONTENTS. 

CHAPTER  VIII. 

FIATISM  AND   CURRENCY. 

PAGE. 

84.  Legal  fiat  and  money 104 

85.  Legal  fiat  and  standard 105 

86.  The  English  law  of  standard 106 

87.  The  English  law  of  silver 107 

88.  Fraud  by  fiatism 108 

89.  Early  American  fiatism 109 

90.  A  celebrated  instance  of  extreme  fiatism no 

91.  The  colonial  fiat  money  craze in 

92.  Elements  of  the  delusion 112 

93.  The  outcome  of  fiatist  finance 112 

94.  Fiatist  zeal  for  American  independence 114 

95.  Continental  fiatist  money 115. 

96.  The  Civil  War  "  Greenback  "  fiatism 118 

97.  The  costs  of  American  fiatism 119 

CHAPTER  IX; 

BIMETALLISM. 

98.  "What  is  Bimetallism?" 120 

99.  Sidney  Sherwood  on  bimetallism 122 

100.  Shaw  on  bimetallism 123 

101.  Error  of  Shaw's  assumption 124 

102.  Confusion  of  points  of  view 125 

103.  Gold  standard  bimetallism 127 

104.  Secure  ratio  for  silver 128 

105.  The  true  bimetallic  interest 129 

106.  Gold  cannot  displace  silver 130 

107.  Advantage  enjoyed  by  silver. 130 

108.  How  silver  lost  first  place 131 

109.  Gold  standard  will  help  silver 131 

CHAPTER  X. 

BIMETALLISM     IN     ENGLAND:       COMPLETE     BREAKDOWN     OF  THE 
DOUBLE   STANDARD   SYSTEM. 

no.  Early  English  silver 133 

in.  Early  English  gold 133 

112.  Recoinage  scheme,  1695-99 .' 134 


TABLE  OF  CONTENTS.  xiii 

PAGE. 

113.  The  money-mongers  got  the  silver 135 

114.  Sir  Isaac  Newton  on  money 135 

115.  England  with  no  good  money 136 

116.  Birth  of  the  present  English  system 137 

117.  A  law  of  tender  applied  to  silver 137 

118.  Coinage  of  silver  suspended 138 

119.  Recoinage  of  silver  —  1816 139 

120.  Reasons  for  the  gold  standard 140 


CHAPTER  XI. 

-BIMETALLISM  IN  FRANCE  —  DISASTROUS  WORKING  OF  THE  DOUBLE 
.  STANDARD  SYSTEM  DRIVES  FRANCE  TO  THE  GOLD  BASIS. 

121.  Early  French  money 140 

122.  French  revolution  money 141 

123.  Mr.  Shaw  on  French  bimetallism 142 

124.  Double  standard  perils 145 

125.  The  gold  standard  a  necessity 146 

126.  The  Latin  Union  and  gold 147 

127.  Final  adoption  of  the  gold  standard 148 

128.  Historic  bimetallism  of  money 149 


CHAPTER  XII. 

THE   UNITED   STATES  AND  BIMETALLISM  —  COMPLETE   FAILURE  OF 
SILVER  —  THE  GOLD  STANDARD  A  NECESSITY. 

129.  Alexander  Hamilton's  money  scheme 150 

130.  Fundamental  error  of  Hamilton 150 

131.  Bimetallism  of  money  practicable 151 

132.  Failure  of  Hamilton's  scheme 152 

133.  The  law  of  1834  throws  out  silver 153 

134.  Gold  becomes  the  only  money 154 

135.  Position  of  silver  reduced  in  1853 154 

136.  Silver  discredited  as  a  standard 155 

137.  Silver  from  1873  not  a  standard 156 

138.  Silver  not  demonetized  in  1873 156 

139.  Gold  the  standard;  not  the  sole  money 157 

140.  Silver  as  money  made  secure 158 


xiv  TABLE  OF  CONTENTS. 

PAGE.. 

141.  Gold  standard  means  double  money 159 

142.  The  Bland  bill  double  standard  scheme 159 

143.  The  Bland  bill  results 160 


CHAPTER  XIII. 

GERMANY    AND    BIMETALLISM  —  THE    GOLD    STANDARD    COMES    IN 
WITH  THE  EMPIRE  —  A  RECENT  GERMAN  SILVER  CRAZE. 

144.  Early  German  monetary  effort 161 

145.  The  Vienna   convention 162 

146.  Germany's  gold  standard  system 162 

147.  German  gold  and  silver 163 

148.  Recent  German  agitation 164 

149.  Inquiry  on  behalf  of  silver 165 

150.  Latest  German  silver  move 165 

CHAPTER  XIV. 

INDIA  AND  THE  GOLD  STANDARD. 

151.  India's  trial  of  silver 166 

152.  India  demands  gold 168 

153.  India  gets  the  gold  standard 169 

154.  Injury  done  by  free  coinage 170 

155.  India's  demand  for  silver 170 

156.  Futile  effort  to  hold  up  silver  in  India 171 

157.  Present  status  of  silver  in  India 172 

CHAPTER  XV. 

MONEY  AND  PRICES. 

158.  Entirely   false   assertion   of  disastrous   fall   caused   by 

gold  —  No  disastrous  change  in  prices 173 

159.  Cause  of  decline  in  prices 174 

160.  How  supply  and  demand  work 175 

161.  The  case  of  cotton 176 

162.  Wheat  prices 176 

163.  Wholly  false  claim  that  appreciation  of  gold  since  1873 

now  injures  debtors 177 

164.  Appreciation  of  gold  desirable 179 


TABLE  OF  CONTENTS.  XV 

PAGE. 

165.  Gold  the  supreme  commodity 179, 

166.  Debtors  not  hurt  by  gold 180 

167.  Gold  the  supreme  servant 181 

168.  Use  of  metals  as  money  does  not  cause  appreciation. ..   182 

169.  Price  of  silver  not  affected  by  use  as  money 183 

170.  Market  price  not  made  by  money  use 185 

171.  Hoodlum  and  rascal  finance 185 

172.  The  foundation  of  prosperity 186 

173.  Entirely  false  idea  that  gold  has  appreciated 186 

174.  The  cause  of  hard  times 188 

175.  False   "American   Independence" 180, 

176.  Anti-English  fanaticism 191 

177.  Anarchist  ravings 193 

178.  Falsification  of  facts 194 

179.  Mendacious  complaint  against  gold  and  banks 195 

180.  France  and  silver 198 

181.  The  world's  money  supply  to-day 199 

182.  Ignorant  idea  that  gold  is  doing  double  work 200 

183.  Gold  did  double  work  before  1873 201 

184.  Silver  has  helped  since  1873 201 

185.  Silver  help  made  matters  worse 202 

186.  Criminal  conspiracy  against  gold 202 

187.  Silver  sale  of  gold 203 


CHAPTER  XVI. 


"  INTERNATIONAL  BIMETALLISM. 

188.  Dr.  F.  A.  Walker's  last  book 204 

189.  Gold  value  wrongly  viewed 205 

190.  Radically  wrong  idea  of  money 206 

191.  Absurd  notion  of  currency  contraction 207 

192.  Possible  regulation  of  gold  and  silver  values 208 

193.  Alleged  economic  force  set  in  motion  by  money  law. . .  208 

194.  Dr.  Walker's  fundamental  error 210 

195.  A  wholly  baseless  theory 212 

196.  False  idea  of  effect  of  new  supply  of  gold 213 

197.  Possible  peril  in  silver 216 

198.  France  forced  to  drop  silver 218 

199.  Double  standard  did  not  give  France  double  money...  220 


xvi  TABLE  OF  CONTENTS. 

PAGE. 

300.  Theory  of  bimetallism  based  on  supposed  French  ex- 
perience    222 

201.  Bimetallism  a  recent  novelty 223 

202.  Errors  of  Dr.  Walker's  argument 224 

203.  Mistakes  of  economists  used  in  proof 226 

204.  Inadequate  defense  of  bimetallism 227 

205.  Alleged  advantages  of  bimetallism 229 

206.  A  wholly  delusive  scheme 231 

207.  "  Demonetization  "  tragedy 232 

208.  Dr.  Walker's  position  indefensible 234 

^209.  Human  progress  means  gold 234 


"Gold  the  Standard  or  Measure  of  Value  —  £ilv*r 

Heading  in  Report  of  Director  of  Mint,  Nov.  /,  1 893.  ' 


THE  STORY  OF  MONEY 

A  SCIENCE  HAND-BOOK  OF  MONEY  QUESTIONS. 


CHAPTER    I. 

INTRODUCTORY. 

I.     BETTER   KNOWLEDGE  NEEDED. 

Mr.  John  Henry  Norman  in  his  interesting1  and 
valuable  "  Complete  Guide  to  the  World's  Twenty-nine 
Metal  Monetary  Systems"  says  by  way  of  a  dedication : 

"  These  pages  are  dedicated  with  profound 
respect  to  the  world's  first  man  of  Science  who  in 
the  future  produces  a  Science  Primer  of  Money : 
such  as  will  compel  the  world  to  accept  and  teach 
it  as  truth." 

Mr.  Norman's  mastery  of  his  particular  field  has 
shown  him  how  commonly  both  writers  and  prac- 
tical men  undertake  discussion  of  some  aspect  or 
aspects  of  the  question  of  money  without  any  ade- 
quate grasp  of  knowledge  and  thought  on  one  of 
the  most  difficult  subjects  upon  which  either  the 
scholar  or  the  statesman  can  enter.  The  whole 
question  of  money  is  one  not  yet  adequately  studied 
by  even  its  greatest  scholars,  and  but  dimly  seen 
into,  in  respect  of  its  wisest  settlement,  by  the 
most  eminent  statesmen.  Bimetallism  of  the  stan- 


dard,  for  example,  is  as  much  against  nature  as  a 
calf  with  two  heads,  while  bimetallism  of  money 
is  as  certainly  necessary  and  practicable,  properly 
planned  and  enacted,  as  gold  and  silver  side  by  side 
in  the  mines  and  the  arts,  the  mints  and  the  mar- 
kets of  the  world.  But  in  what  conference  of  econo- 
mists, or  in  what  house  or  senate,  or  by  what  writer 
or  speaker,  have  these  two  separate  and  opposite 
bimetallisms  been  clearly  put  over  against  each 
other,  contrasted  and  understood,  each  in  its  true 
significance,  so  as  to  give  to  science  and  to  finance 
absolute  monometallism  of  the  standard  and  ade- 
quate bimetallism  of  money. 

2.     BIMETALLISM   NOT  RIGHTLY   EXPLAINED. 

Upton's  excellent  "Coin  Catechism"  speaks  of 
"  Free  Coinage  or  Bimetallism,"  making  the  last 
term  mean  the  same  as  the  first,  and  says  that ' '  the 
fact  that  Bimetallism  has  been  tried  by  nearly 
every  nation  of  the  world  and  abandoned  as  imprac- 
ticable should  keep  the  United  States  from  any 
such  folly  as  attempting  its  restoration  through 
any  scheme."  *  This  refers,  of  course,  to  bimet- 
allism of  the  standard,  and  it  is,  for  what  it  has  in 
view,  a  perfectly  just  statement.  But  it  has  the 
very  grave  defect  of  appearing  to  assume  that  there 
can  be  no  other  bimetallism  than  that  which  it  con- 
demns. It  takes  no  thought  of  a  desirable  and 
wise,  a  safe  and  necessary,  bimetallism  of  money. 
Yet  this  is,  in  fact,  the  only  real  practicable  bimet- 
allism, for  the  simple  reason,  as  our  review  of  the 

Pp.  28,  96. 


history  will  show,  that  under  the  double  standard 
system,  that  one  of  the  two  metals  which  is  cheap- 
est in  the  market  takes  the  whole  of  the  money 
field,  and  the  other,  simply  because  it  is  worth 
more  as  merchandise  than  as  money,  entirely  leaves 
the  field,  and  there  is  monometallism  of  money, 
actual  and  practical  monometallism,  in  spite  of  the 
nominal  bimetallism. 

3.   SHAW'S  "  HISTORY  OF  CURRENCY." 

Mr.  W.  A.  Shaw's  "  History  of  Currency -,  1252- 
1894., ' '  places  him  in  the  very  front  rank  of  authori- 
ties on  the  subject  of  money.  His  work  is  perfectly 
invaluable  for  his  story  of  what  befell  the  great 
countries  of  the  world  under  the  vain  attempt  which 
they  made  to  use  both  silver  and  gold  as  standard 
money,  and  how  they  were  all  driven  to  gold  as  the 
better  metal  for  money,  and  as  the  sole  standard ; 
and  in  order  to  have  silver  also,  as  a  safe  and  secure 
money,  were  compelled  to  put  it  into  a  secondary, 
subsidiary  position,  as  under-standard  money,  of 
limited  tender,  and  upon  fiat  parity  with  gold. 

But  Mr.  Shaw's  conceptions,  thoroughly  sound 
as  they  are,  keep  to  a  certain  extent  the  old  point 
of  view,  under  which  money  and  standard  meant 
the  same  thing.  Thus,  he  designates  as  "mono- 
metallic" the  ideal  monetary  system,  and  yet 
describes  it  as  "one  in  which  a  single  metal  is  made 
the  legal  tender,  and  a  second  or  third  metal  bound 
to  it  in  a  hard-and-fast,  subordinate  relationship," 
—  an  arrangement  which  secures  bimetallism  of 
money,  under  monometallism  of  the  standard. 

And,  again,  Mr.  Shaw  says  that  the  main  basis 


of  the  truest  modern  currency  system  is  these  two 
ideas  thoroughly  seized  and  put  in  practice,  — 
(i)  the  idea  of  limiting  the  tender  of  the  secondary 
money,  so  that  it  shall  remain  strictly  subsidiary ; 
and  (2)  the  idea  of  issuing  fractional  money  on  a 
basis  of  real  value  distinctly  lower  than  the  face 
value.  These  two  ideas,  as  thus  stated,  do  not 
quite  express  the  basis  of  the  truest  modern  cur- 
rency. In  that  basis  the  secondary  money,  —  our 
silver  dollar  for  example,  —  must  be,  precisely  the 
same  as  fractional  money,  on  a  basis  of  real  value 
distinctly  lower  than  the  face  value;  it  must  be 
subsidiary. 

4.  WHITE'S  "MONEY  AND  BANKING." 

Another  work  of  superlative  merit,  and  one  thor- 
oughly fitted  to  serve  as  a  handbook  for  every  class 
of  readers,  —  Mr.  Horace  White's  "  Money  and  Bank- 
ing :  Illustrated  by  American  History," — comes 
short  to  a  certain  extent  in  its  defining  conceptions, 
either  stated  or  assumed.  The  title  of  the  first 
chapter,  "  Money  a  Commodity/'  conveys  an  error. 
Money  is  never  a  commodity ;  a  commodity  is  never 
money.  Gold  may  be  a  commodity,  or  it  may  serve 
as  money  when  properly  designated  to  that  service. 
The  commodity,  gold,  not  made  money,  may  pass 
instead  of  money,  quite  as  money  would,  but  that 
does  not  make  it  money.  Coined  and  issued  gold 
may  be  both  money  and  a  commodity.  If  it  is  at 
all  over-value  coin,  it  will  work  as  a  commodity 
only,  and  will  not  work  as  money.  The  market 
will  take  it  all  for  what  it  is  worth  to  trade  in. 
The  same  is  true  of  silver.  The  breakdown  of  sil- 


5 

ver  as  standard  money  has  resulted  very  largely 
from  the  fact  that  it  has  so  often,  and  through  so 
long  periods,  had  more  value  as  metal  than  as 
money,  with  the  result  that  trade  in  it  as  a  com- 
modity wholly  removed  it  from  the  field  of  money. 
As  soon  as  the  modern  world  began  to  understand 
how  the  double  standard  involved  failure  of  the 
under-valued  metal  to  stay  in  use  as  money,  care 
was  taken  that  this  metal  should  be  silver  rather 
than  gold,  so  that  silver  was  deliberately  let  go 
rather  than  let  gold  go.  In  the  new  silver  period, 
silver  has  been  declining  in  value  so  steadily  as  to 
create  the  instant  risk  that  under  a  ratio  true  to  the 
market  to-day,  it  would  be  down  below  that  ratio 
to-morrow,  and  would  thus  cause  a  loss  of  gold,  and 
leave  only  silver  as  money.  It  is  this  change  in 
silver  which  has  made  it  necessary  to  have  either 
the  gold  standard  with  the  silver  subsidiary,  or 
silver  money  only  and  no  gold. 

It  is  quite  right  to  bring  out  clearly  that  money, 
good  real  money,  requires  something  which  has 
value  as  a  commodity,  and  which  may  be,  in  great 
part  at  least,  or  in  some  properly  designated  part, 
intrinsically  worth  what  it  is  to  pass  for ;  but  it 
must  be  no  less  something  meeting  other  conditions 
of  money,  such  as  common  occurrence  and  abund- 
ance, and  of  a  relatively  steady  and  even  value. 

And  the  new  ideas  of  money  contain  nothing 
more  important  than  the  principle  that  while  stan- 
dard money  of  gold  should  be  of  full  intrinsic  value, 
worth  exactly  as  much,  therefore,  as  a  commodity 
as  it  is  as  money,  any  other  money  placed  under 
this  standard,  as  silver,  and  notably  the  amount  of 


silver  which  adequate  bimetallism  of  money  calls 
for,  must  in  no  case  figure  as  commodity  at  more 
than  about  nine-tenths  of  its  face  value  as  money, 
but  must  be  to  at  least  about  one-tenth  fiat,  repre- 
sentative, payable-in-gold,  value,  in  order  that 
there  may  be  no  danger  of  its  taking  to  itself  wings 
of  real  value,  by  rise  in  the  market  price  of  the 
material,  and  flying  away  from  the  field  of  money 
to  the  market  for  commodities,  —  as  in  1873  Ameri- 
can silver  had  done  for  forty  years.  Commodity,  in 
fact,  is  never  money  until  it  is  properly  made 
money ;  and  we  have  learned  that  the  proper  mak- 
ing of  gold  into  standard  money  leaves  it  of  full 
value  as  commorlity,  while  the  proper  making  of 
silver  into  money  never  does  this. 

Mr.  White,  as  will  be  explained  a  little  further 
on,  has  a  good  deal  to  say  about  commodities  being 
made  money,  when  they  were  in  fact  traded  in  by 
way  of  regulated  barter,  with  the  express  purpose 
of  avoiding  the  use  of  money. 

And  as  perhaps  the  ablest  American  advocate  of 
the  gold  standard,  and  of  gold  as  money,  money 
equally  good  as  commodity  or  as  money,  Mr.  White 
leaves  the  whole  matter  too  much  as  though  the 
question  of  gold  and  the  question  of  money  were 
the  same,  and  silver  need  not  be  taken  into  account. 
He  has,  perhaps,  not  said  his  last  word  upon  the 
use  of  silver  as  money;  and  he  certainly  has  not 
said  too  much  in  advocacy  of  the  gold  standard; 
yet,  beyond  a  question,  it  is  money  of  both  gold 
and  silver  that  we  need  to  know  about  to-day,  and 
to  know  all  that  we  can  know,  whether  the  history 
of  money  in  all  its  kinds,  or  the  judgment  upon 


money,  which  is  to  make  the  future,  not  only  of 
money  but  of  the  vast  interests  depending  upon  it. 

5.  DR.  FRANCIS  A.  WALKER  ON  MONEY. 

Mr.  Norman,  to  whose  work  reference  has  been 
made  above,  makes  this  declaration : 

"  I  am  under  the  profound  conviction  that  the 
world,  at  present,  has  no  science  of  money,  and 
that  it  is  a  disgrace  to  science  and  common  sense 
that  there  is  no  safe  guide  to  what  money  is  and 
how  it  does  its  work." 

Referring  to  F.  A.  Walker's  "Money,  Trade,  and 
Industry, "  Mr.  Norman  says,  that  while  it  was  recom- 
mended to  him  by  Mr.  Stanley  Jevons  as  the  best 
foook  on  money,  he  not  only  found  it  lamentably 
disappointing,  but  felt  compelled  to  pronounce 
Walker's  views  the  unsoundest  which  have  been 
generally  accepted  since  Locke's  time;  and  this, 
although  the  work  is  an  accepted  text-book  in  Eng- 
lish institutions  of  learning.* 

There  is  but  too  much  reason  for  Mr.  Norman's 
severe  judgment.  Walker  pronounces  money  ' '  that 
which  passes  freely  from  hand  to  hand  throughout 
the  community  in  final  discharge  of  debts  and  full 
payment  for  commodities,  being  accepted  equally 


*  "  The  writer  has  recently  read  thirty  definitions  of  money  in  that 
number  of  English  and  American  Encyclopaedias  and  Dictionaries. 
In  his  opinion  the  unsoundest  of  them  all  is  in  the  Encyclopaedia 
Britannica  of  1883,  because  it  contains  Professor  F.  A.  Walker's 
definition  of  money,  which  embraces  everything  that  passes  from 
hand  to  hand  —  such  as  credit  instruments  —  and  facilitates  the 
interchange  of  commodities,  properties,  etc.  This  definition  is  a 
dangerously  specious  one,  and  appears  to  have  enthralled  most  of 
the  younger  political  economists  of  the  world."  Norman:  Com- 
plete Guide,  pp.  103,  104. 


8 

without  reference  to  the  character  or  credit  of  the 
person  who  offers  it,  and  without  the  intention  of 
the  person  who  receives  it  to  consume  it  or  enjoy 
it  or  apply  it  to  any  other  use  than  in  turn  to  tender 
it  to  others  in  discharge  of  debts  or  in  payment  for 
commodities. ' ' 

The  fault  of  this  definition  is  that  it  tells  certain 
things  which  are  true  about  money  without  any 
allusion  to  the  things  which  make  true  money.  It 
deals  with  superficial  facts  of  money,  but  does  not 
touch  the  fundamental  facts  of  money  at  all.  It  is 
an  entirely  worthless  definition  for  purposes  of 
science,  although  a  very  good  statement  of  what  in 
general  money  serves  for. 

One  or  two  illustrations  will  expose  the  defect  of 
Walker's  attempt  to  define  money.  In  a  Chinese 
community  the  supposititious  drug  known  as  gin- 
seng,  and  ignorantly  held  to  be  worth  many  times 
per  ounce  the  value  of  gold,  would  pass  freely  from 
hand  to  hand  in  discharge  of  debt  and  payment  for 
commodities.  But  that  would  not  make  it  money. 
It  would  still  remain  a  supposititious  drug  of  no  real 
medical  value,  and  current  only  in  consequence  of 
the  ignorance  and  superstition  of  the  Chinese. 

And  if  we  take  the  example  of  true  money  in 
gold,  it  may  be  received,  and  often  is  received,  by 
those  who  intend  to  consume  it  in  the  melting-pot, 
or  to  hoard  it  as  a  store  of  value  instead  of  them- 
selves tendering  it  again  as  it  was  tendered  to 
them.  In  such  case,  according  to  Walker,  the  gold 
coins  of  true  value  and  character  as  money  are  yet 
not  money,  because  of  the  accidental  use  to  which 
they  are  to  be  put. 


9 

Norman  correctly  points  out  that  Locke  made  an 
unfortunately  superficial  statement  when  he  defined 
intrinsic  value  as  that  estimate  which  common 
consent  has  placed  upon  the  thing  valued.  It  is 
but  too  plain  that  common  consent,  at  any  time  or 
any  place,  may  make  a  wrong  estimate  of  value, 
and  that  even  an  approach  to  a  true  estimate  cannot 
be  made  without  looking  farther,  both  as  respects 
place  and  time;  and  in  thus  looking  farther  we 
come  upon  the  fact  that  common  consent  in  various 
places  and  at  various  times  changes  differently  for 
different  things.  If,  for  instance,  we  take  such 
substances  as  gold,  silver,  copper,  platinum,  nickel, 
etc.,  we  see  that  as  we  pass  down  the  list  the  diffi- 
culty of  trusting  common  consent  at  any  moment 
or  at  any  place  increases.  If,  therefore,  we  seek 
to  avoid  this  difficulty  to  the  utmost  extent  possible 
in  the  nature  of  things,  we  must  stop  upon  the 
substance  at  the  top  of  the  list.  We  cannot,  there- 
fore,  define  money,  as  Walker  does,  as  anything 
that  passes  for  money.  The  definition,  in  fact,  is 
not  only  not  science,  but  it  is  economic  error  of  an 
extreme  type.* 

*What  may  be  called  learned  inaccuracy,  able  and  scholarly 
error,  appears  most  frequently  in  the  saying  of  something  strikingly 
true  by  way  of  definition,  which  yet  wholly  fails  to  define.  The 
Encyclopaedia  Britannica,  made  in  great  part  by  authors  of  distinc- 
tion, without  any  special  knowledge  of  the  Encyclopaedist's  art,  is 
rich  to  a  degree  in  definitions  which  do  not  define.  Dr.  Walker's 
definition  of  money  is  one  of  the  ablest  of  these,  and  one  of  the 
worst. 

It  would  be  hard  to  be  more  learnedly  wrong.  What  constitutes 
money,  what  makes  it  money,  is  one  thing,  or  set  of  things;  what 
money  will  do  is  another  thing,  or  set  of  things,  which  may  not 
help  to  make  it  money. 


10 

CHAPTER  II. 

THE  EARLIEST  ORIGIN  AND  IDEA  OF  MONEY. 
6.   IMPORTANCE   OF  THE   STORY   OF   MONEY. 

The  first  great  necessity  for  an  outline  Science 
of  Money  is  a  plain  story  of  what  in  nature  and  in 
idea  money  is,  on  the  basis  of  gold  monometallism 
of  the  standard  and  gold  and  silver  bimetallism  of 
money;  how  gold  "got  there,"  as  the  natural  and 
necessary  standard,  and  how  best  to  yoke  silver 
with  gold,  that  they  may  together  meet  all  the 
demands  of  mankind  for  money,  money  of  account 
and  security,  and  money  of  currency  and  credit; 
gold  standard  money  and  both  gold  and  silver  cur- 
rency money. 

7.    EARLIEST   FACTS   OF   MONEY. 

Even  the  earliest  facts  of  the  story  of  money  show 
how  gold  came  naturally  to  its  place,  and  with 
what  idea  both  gold  and  silver  came  into  use  as 
money.  Recent  books  full  of  new  knowledge  of 
Babylonia  and  of  Egypt,  in  the  dawn  of  history 
forty  centuries  before  the  era  of  Christ,  enable  us 
to  make  an  exact  and  conclusive  statement  of  the 
true  origin  and  the  fundamental  idea  of  money. 
If,  for  example,  we  turn  to  Maspero's  magnificent 
book  on  "  The  Dawn  of  History,"  in  which  he  reports 
the  earliest  facts  both  of  Egypt  and  of  Babylonia, 
and  to  the  equally  admirable  book  of  Erman  on 
Egypt,  we  may  easily  glean  the  facts  which  reveal 
in  the  clearest  manner  how  money  originated,  and 


II 

liow  barter  transactions  became  cash  transactions ; 
always  and  everywhere,  in  the  long  run,  tending 
to  a  gold  basis. 

8.  BUSINESS  BY  BARTER  IN  EGYPT. 

Business,  M.  Maspero  tells  us,  was  mostly  carried 
on  in  early  Egypt  by  barter.  Purchasers  brought 
with  them  some  product  of  their  toil,  — a  new  tool, 
a  pair  of  shoes,  a  reed  mat,  pots  of  unguents  or 
cordials;  often,  too,  rows  of  cowries  and  a  small 
box  full  of  rings,  each  weighing  a  "tabnu"  (91  to  92 
grammes),  made  of  copper,  silver,  or  gold,  all  des- 
tined to  be  bartered  for  such  things  as  they  needed. 

When  it  came  to  be  a  question  of  some  large  ani- 
mal or  of  objects  of  considerable  value,  it  was 
necessary  to  be  agreed  not  only  as  to  the  amount, 
but  as  to  the  nature  of  the  payment  to  be  made, 
and  to  draw  up  a  sort  of  invoice,  or,  in  fact,  an 
inventory,  in  which  beds,  sticks,  honey,  oil,  pick- 
axes, and  garments  all  figure  as  equivalents  for  a 
bull  or  a  she  ass.  Smaller  retail  bargans  did  not 
damand  so  many  or  such  complicated  calculations. 

Exchanging  commodities  for  metal  necessitated 
two  or  three  operations  not  required  in  ordinary 
barter.  The  rings  or  thin  bent  strips  of  metal 
which  formed  the  "  tabnu  "  and  its  multiples,  did 
not  always  contain  the  regulation  amount  of  gold  or 
silver,  and  were  often  of  light  weight.  They  had 
to  be  weighed  at  every  fresh  transaction  in  order 
to  estimate  their  true  value.  The  weighing  of 
rings  is  often  represented  on  the  monuments  from 
the  eighteenth  dynasty  onward;  not  on  the  bas- 
reliefs  of  the  Ancient  Empire. 


12 

The  rings  of  gold  in  the  museum  at  Leyden, 
which  were  used  as  a  basis  of  exchange,  are  made 
on  the  Babylonian  pattern,  and  belong  to  the  Asi- 
atic system. 

Erman  remarks  on  barter  among  the  Egyptians : 
"All  the  trade  of  Egypt  was  carried  on  by  barter, 
and  nothing  was  given  in  payment  except  goods 
or  produce. 

"It  seems  strange  to  us  of  the  modern  world  that 
a  nation  should  hold  markets,  sell  cattle,  lend  on 
interest,  pay  salaries,  and  collect  taxes  without 
even  knowing  the  use  of  small  coin. 

"But  this  is  really  not  so  difficult  as  we  might 
imagine,  and  the  Mahommedans  of  the  negro  coun- 
tries in  Africa  may  be  cited  as  proof  that  a  com- 
paratively high  standard  of  civilization  is  compat- 
ible with  trade  by  barter. 

"Barter  of  this  kind  never  indeed  remains  purely 
as  such  for  any  length  of  time.  The  exigencies  of 
trade  soon  require  that  some  object  should  be  set 
aside  as  an  arbitrary  standard  by  which  the  value 
of  the  various  objects  for  exchange  can  be  measured 
and  compared. 

"Thus,  at  the  present  day  in  the  Soudan,  if  a 
man  buys  gunpowder,  he  may,  perhaps,  pay  the 
merchant  for  it  in  fowls,  but  in  order  to  know  how 
much  powder  the  one  has  to  give,  and  how  many 
fowls  the  other  has  to  pay,  they  both  reckon  the 
present  market  value  of  their  goods  in  a  third  com- 
modity in  common  use,  perhaps  in  amber  beads. 

"They  may  not  make  use  of  any  amber  beads  in 
payment,  or  merely  of  a  few  to  adjust  some  slight 
difference  in  value,  but  the  beads  have  become  an 


13 

arbitrary  measure  of  value  in  the  market  by  which 
the  price  of  goods  can  be  reckoned. 

' '  We  see  that  in  this  case  amber  beads  really  play 
the  part  of  money. 

"Measures  of  value  of  this  kind  are  still  common 
in  Africa,  and  the  merchants  who  carry  on  trade 
with  the  interior  have  to  acquire  exact  knowledge 
of  the  usages  of  the  various  markets  and  towns. 

"In  one  place  beads  may  be  used,  in  another 
blocks  of  salt,  in  another  iron  spades  or  Styrian 
razors,  or,  perhaps,  Merikanis,  i.  e.,  pieces  of  bad 
American  cotton  goods  of  a  certain  size." 

9.    USE   OF   GOLD   IN   EGYPT. 

In  his  "Manual  of  Egyptian  Archeology"  Maspero 
speaks  especially  of  the  use  of  gold  in  Egypt.  The 
Egyptians  were  great  lovers  of  jewelry.  Not  con- 
tent to  adorn  themselves  when  living  with  a  pro- 
fusion of  trinkets,  they  loaded  the  arms,  the  fingers, 
the  neck,  the  ears,  the  brow,  and  the  ankles  of  their 
dead  with  more  or  less  costly  ornaments.  The 
quantity  thus  buried  in  tombs  was  so  considerable 
that  even  now,  after  thirty  centuries  of  active 
search,  we  find  from  time  to  time  mummies  which 
are,  so  to  say,  "cuirassed  in  gold." 

The  Egyptians,  says  Maspero,  classified  metals 
under  two  heads,  namely,  the  noble  metals,  as  gold, 
electrum,  and  silver,  and  the  base  metals,  as  copper, 
iron,  lead,  and,  at  a  later  period,  tin.  Erman  men- 
tions  the  interesting  fact  that  the  two  wonderful 
papyri,  which  are  famous  as  the  oldest  maps  in  the 
world,  relate  to  the  gold  mines  of  Sety  I.  and  his 
son  Rameses  II.,  the  second  and  third  kings  of  the 


14 

dynasty,  which  Rameses  I.  founded  about 
B.  C.  1400.  Erman  says  of  gold  as  an  article  of 
commerce  in  Egypt : 

"For  commercial  purposes  gold  was  as  a  rule 
formed  into  rings,  which  seem  to  have  been  of  very 
variable  thickness,  with  a  uniform  diameter  of 
about  five  inches.  Naturally  these  rings  were  not 
taken  on  trust,  and  whenever  they  were  paid  over, 
we  see  the  master- weigher  and  the  scribes  busy 
weighing  them  and  entering  the  ascertained  weight 
in  their  books.  We  hear  of  enormous  sums  chang- 
ing hands  in  this  way." 

10.    SILVER   IN    EGYPT. 

A  remarkable  illustration  of  the  working  of  natu- 
ral law,  whether  in  temporarily  or  in  permanently 
making  the  place  of  a  precious  metal,  appears  in 
the  story  of  silver  in  early  Egypt.  Erman  tells  it 
as  follows : 

"The  Egyptians  regarded  silver  as  the  most 
valuable  of  all  precious  metals.  It  stands  before 
gold  in  all  the  old  inscriptions,  and  in  fact  in 
the  tombs  silver  objects  are  much  rarer  than  gold 
ones. 

"  This  curious  circumstance  admits  of  a  very 
simple  explanation :  no  silver  was  to  be  found  in 
Egypt.  The 'White,'  as  silver  was  called,  was 
probably  imported  from  Cilicia;  the  Phoenicians 
and  Syrians  carried  on  this  trade  in  the  time  of  the 
eighteenth  dynasty  (under  which  the  New  Empire 
began  at  Thebes). 

"  Either  the  brisker  trade  in  this  metal,  or  the 
discovery  of  new  mines,  led  to  a  fall  in  the  value 


15 

of  silver  under  the  New  Empire,  for  later  texts 
usually  mention  gold  first  in  the  same  way  that 
we  do." 

II.    A   GOLD-SILVER  COMPOUND. 

In  Egyptian  use,  says  Maspero,  the  gold  was 
often  amalgamated  with  pure  silver.  When  amal- 
gamated to  the  extent  of  twenty  per  cent,  it  changed 
its  name  and  was  called  electrum  (asimu).  This 
electrum  was  of  a  fine  light  yellow  color.  It  paled 
as  the  proportion  of  silver  became  larger,  and  at 
sixty  per  cent,  it  was  nearly  white.  The  silver 
came  chiefly  from  Asia,  in  rings,  sheets,  and  bricks 
of  standard  weight.  The  gold  and  electrum  came 
partly  from  Syria  in  bricks  and  rings ;  and  partly 
from  the  Soudan  in  nuggets  and  gold  dust.  The 
Egyptians,  says  Maspero,  struck  neither  coins  nor 
medals ;  but  with  these  exceptions  made  the  same 
use  of  the  precious  metals  as  we  do  ourselves. 
Erman  says  of  this  gold-silver  compound : 
' '  In  addition  to  gold  and  silver  another  precious 
metal,  the  iism,  is  frequently  mentioned.  Lepsius 
recognized  this  as  electron,  the  mixture  of  gold  and 
silver.  The  proportion  of  the  gold  to  silver  was 
apparently  that  of  two  to  three.  Under  Thothmes 
III.  an  official  receives  a  'great  heap'  of  electron, 
which,  if  we  may  believe  the  inscription,  would  be 
woith  at  least  ^"200,000  —  $1,000,000." 

12.    EARLIEST   MONEY   OF  EGYPT  COPPER. 

A  curious  fact  in  the  very  earliest  history  of 
money  is  the  use  of  copper  for  money,  while  gold 
and  silver  had  not  yet  come  to  serve  that  purpose, 


i6 

but  were  exchanged  as  commodities.  The  fact 
seems  to  have  been  that  small  money  was  far  the 
most  needed,  and  that  it  sufficiently  aided  the  ordi- 
nary transactions  by  barter.  Maspero  says  of  this 
use  of  copper,  not  as  coins,  but  in  small  bits 
unstamped,  and  current  by  weight :  ' '  We  must,  per- 
haps, agree  with  Lenormant  in  his  conclusion  that 
the  only  kind  of  national  metal  of  exchange  in  use 
in  Egypt  was  a  copper  wire  or  plate  bent  thus  S> 
but  more  flat." 

And  Erman  again  tells  us : 

"Under  the  New  Empire  in  Ancient  Africa  (the 
Theban  Empire  in  Egypt),  a  copper  piece  of  one 
uten,  i.  e.,  of  ninety-one  grammes,  was  in  use  as  a 
measure  of  value.  This  copper  piece  was  in  the 
form  of  a  spiral  wire.  (The  word  uten  is  read  by 
Maspero  tabnu.) 

13.    BABYLONIAN   USE   OF   PRECIOUS   METALS. 

The  Babylonians,  says  Maspero,  like  the  Egyp- 
tians, were  unacquainted  with  the  use  of  money, 
but  from  the  earliest  times  the  employment  of 
precious  metals  for  purposes  of  exchange  was  prac- 
ticed among  them  to  an  enormous  extent. 

Though  copper  and  gold  were  both  used,  silver 
was  the  principal  medium  in  these  transactions, 
and  formed  the  standard  value  of  all  purchasable 
objects.  It  was  never  cut  into  flat  rings  or  twists 
of  wire,  as  was  the  case  with  the  Egyptian 
"tabnu."  It  was  melted  into  small  unstamped 
ingots,  which  were  passed  from  hand  to  hand  by 
weight,  being  tested  in  the  scales  at  each 
transaction. 


"  To  weigh'  was  in  the  ordinary  language  the 
equivalent  for  "  payment  in  metal,"  whereas  to 
measure  denoted  that  the  payment  was  in  grain. 
The  ingots  for  exchange  were,  therefore,  desig- 
nated by  the  name  of  the  weights  to  which  they 
corresponded.  The  lowest  unit  was  a  shekel, 
weighing  on  an  average  nearly  half  an  ounce,  sixty 
shekels  making  a  mina,  and  sixty  minas  a  talent. 
It  is  a  question  whether  the  Babylonians  possessed 
in  early  times,  as  did  the  Assyrians  of  a  later 
period,  two  kinds  of  shekels,  and  minas,  one  heavy 
and  the  other  light. 

14.    AFRICAN  COWRIES  AS  MONEY. 

The  cowries  mentioned  by  Maspero  as  among 
the  objects  traded  in  by  the  early  Egyptians,  and 
passed  from  hand  to  hand  in  transaction  of  barter, 
became  at  an  indefinitely  remote  date,  first  an 
article  of  common  adornment  with  universal  intrin- 
sic value,  a  kind  of  shell  jewelry,  and  on  the  basis 
of  this  universal  value,  a  low-culture  African  cash 
—  perhaps  the  oldest  cash  in  the  world. 

"  Cowry  "  or  "cowrie  "  is  the  name  of  the  shell 
of  a  family  of  Molluscs  known  as  the  Cyproeida. 
Upwards  of  one  hundred  species  are  known  and 
they  are  widely  distributed  over  the  world  in  the 
shallow  water  along  the  shores  of  the  sea.  The 
best  known  is  the  money  cowry  or  Cyprcea  moneta. 
One  authority  describes  this  as  "A  small  shell 
about  half  an  inch  in  length,  white  and  straw- 
colored  without  and  blue  within,  which  derives  its 
distinctive  name  from  the  fact  that  in  various  coun- 
tries it  has  been  employed  as  a  kind  of  currency." 
2 


i8 

Another  authority  says:  —  "A  small  yellowish- 
white  shell  with  a  fine  gloss,  used  by  various  peo- 
ples as  money."  It  is  most  abundant  in  the  Indian 
Ocean,  on  the  coasts  of  Africa  and  India  and  those 
of  the  East  India  Islands.  It  was  used  in  China 
for  money  before  the  introduction  of  metal  money. 
In  Bengal  its  use  lasted  until  recent  times  and 
called  for  one  hundred  and  fifty  thousand  dollars 
worth  every  year.  In  other  parts  of  India  it  is 
still  in  use,  but  its  widest  employment  is  among 
the  natives  of  Africa.  On  the  western  coasts  of 
Africa,  where  it  is  the  usual  money  tender,  the 
shells  are  fastened  together  in  strings  of  forty  or 
sometimes  of  one  hundred  each ;  fifty  of  the  smaller 
strings  and  twenty  of  the  larger,  or  two  thousand 
cowries,  representing  a  dollar ;  each  shell  therefore 
representing  one-twentieth  of  a  cent.  Even  among 
tribes  who  do  not  recognize  cowries  as  money,  they 
still  have  a  value  as  fashionable  decorations. 

15.    INDIAN   WAMPUM    MONEY. 

The  wampum  of  the  Indians  of  North  America 
consisted  of  strings  of  small  shell  heads  which  were 
used  both  as  money  and  for  ornament.  It  was  of 
two  kinds,  white  and  dark  purple  or  black.  When 
first  known  to  the  English,  six  of  the  white  or 
three  of  the  black  were  reckoned  equal  to  a  penny, 
or  two  cents.  The  strings  of  shells,  besides  passing 
as  money,  were  worn  as  bracelets  and  necklaces 
and  wrought  into  belts  of  curious  workmanship. 
The  word  wampum  meant  white,  so  that  the  name 
of  the  Indian  money  was  the  White,  referring  to 
the  more  common  type  of  beads. 


19 

The  full  name  of  the  common  Indian  money  was 
wampumpeag,  meaning  white  strung  beads.  The 
more  rare  variety  was  much  less  used.  The  name 
of  the  first,  which  was  far  the  most  common,  became 
the  ordinary  name  for  money  under  the  abbreviated 
form  of  wampum.  The  black  variety,  which  was 
in  fact  dark  purple,  passed  as  of  double  value 
because  it  was  less  common  and  was  more  esteemed 
for  ornament. 

l6.    INTRINSIC  VALUE   THE   BASIS   OF   MONEY. 

These  extremely  primitive  examples  of  money 
conclusively  illustrate  the  fact  that  intrinsic  value 
is  everywhere  and  always  the  true  basis  of  money. 
It  was  an  especially  pretty  shell  which  became  the 
money  cowry,  and  in  the  same  way  a  manufactured 
shell  bead,  of  two  kinds,  differing  in  intrinsic  value, 
became  the  Indian  Wampum. 

Mr.  Jevons,  in  his  able  book  on  money,  says  on 
this  point : 

"A  passion  for  personal  adornment  is  one  of  the 
most  primitive  and  powerful  instincts  of  the  human 
race,  and  as  articles  used  for  such  purposes  would 
be  durable,  universally  esteemed,  and  easily  trans- 
ferable, it  is  natural  that  they  should  be  circulated 
as  money.  The  wampumpeag  of  the  North  Ameri- 
can Indians  is  a  case  in  point,  as  it  certainly  served 
as  jewelry.  It  consisted  of  beads  made  of  the  ends 
of  black  and  white  shells,  rubbed  down  and  pol- 
ished, and  then  strung  into  belts  or  necklaces, 
which  were  valued  according  to  their  length  and 
also  according  to  their  color  and  luster,  a  foot  of 
black  peag  being  worth  two  feet  of  svhite  peag. 


20 

Exactly  analogous  to  this  North  American  currency 
is  that  of  the  cowry  shells  used  as  small  money  in 
British  India,  Siain,  the  west  coast  of  Africa,  and 
elsewhere.  Among  the  Fijians  whales'  teeth  served 
in  the  place  of  cowries,  and  white  teeth  were 
exchanged  for  red  teeth  somewhat  in  the  ratio  of 
shillings  to  sovereigns.'* 

17.    REGULATED   BARTER  WITHOUT   MONEY. 

The  principle  which  produces  money  has  been 
very  widely  acted  on  in  what  may  be  called  regu- 
lated barter.  A  great  variety  of  articles  of  well- 
known  intrinsic  value  have  been,  at  different  times 
and  in  different  places,  used  as  we  use  money. 
Furs  or  skins  were  thus  employed  in  many  ancient 
nations,  and  again  in  recent  times  in  the  traffic  of 
the  Hudson's  Bay  Company  with  the  North  Ameri- 
can Indians.  In  that  early  stage  of  society  repre- 
sented in  the  poems  of  Homer,  the  extent  to  which 
cattle  were  a  common  possession  led  to  estimating 
values  in  oxen;  thus  the  shield  of  Glaucos  was 
valued  at  one  hundred  oxen ;  that  of  Diomed,  at 
nine ;  a  tripod  given  as  the  first  prize  for  wrestlers, 
at  twelve ;  and  a  woman  captive,  guaranteed  to 
make  a  good  hired  girl,  at  four.  The  Latin  word 
pecunia,  meaning  money,  is  derived  from  the  word 
pecus,  meaning  cattle.  Our  word  fee  is  from  the 
Anglo-Saxon  word  feoh,  which  means  both  cattle 
and  money.  In  the  ancient  German  codes  of  law 
fines  and  penalties  were  stated  in  terms  of  live 
stock.  In  countries  where  slaves  are  a  common 

*  Money  and  the  Mechanism  of  Exchange,  p.  24. 


21 

and  valuable  possession  they  have  been  in  all  ages 
counted  as  we  count  money.  Wheat,  barley  and 
oats  have  been  so  counted  in  Europe  and  Indian 
corn  in  America.  Olive  oil  has  been  so  counted  in 
countries  where  it  is  a  common  article  of  produce 
and  consumption.  In  Central  America  and  Yucatan 
cocoanuts  have  been  used  as  we  use  money ;  so  also 
almonds  in  European  countries  where  they  are 
grown ;  but  with  great  chances  of  variation  in  their 
nominal  value  according  to  their  abundance  or 
scarcity  in  any  year.  In  Virginia,  in  1618,  the  fiat 
of  the  governor  made  a  pound  of  tobacco  tender 
equal  to  three  shillings.  Young  women  imported 
as  wives  for  the  settlers  were  disposed  of  at  one 
hundred  pounds  of  tobacco  each,  and  later  one  hun- 
dred and  fifty  pounds.  Grain  was  made  legal  tender 
in  Massachusetts  in  1641.  As  late  as  1732  Maryland 
made  corn  and  tobacco  legal  tender.  Alpine  vil- 
lages in  Switzerland  have  used  eggs  as  we  use 
money,  and  Newfoundland  has  used  dried  codfish. 
In  many  countries,  remote  from  civilization,  pieces 
of  cotton  cloth  have  taken  the  place  of  money. 

But  in  all  cases  in  which  anything  of  this  kind 
has  been  done,  the  invariable  rule  has  been  accep- 
tance of  some  convenient  article  or  articles  to  be 
used  as  we  use  money,  on  the  basis  of  intrinsic 
value.  Even  where  there  have  been  touches  of 
fiatism  there  has  been  no  departure  from  the  prin- 
ciple of  employing  articles  in  place  of  money  accord- 
ing to  their  intrinsic  value.  And  it  is  entirely  a 
mistake  to  represent  that  these  articles  of  barter, 
made  to  serve  to  some  extent  as  money  serves, 
were  money.  They  were  simply  articles  of  barter, 


22 

handled  somewhat  as  we  handle  money.  The  wam- 
pum of  the  Indians  and  the  cowries  of  Africa  may 
be  taken  as  savage  money.  To  the  savage  mind  the 
intrinsic  value  of  the  beads  and  the  shells  was  like 
that  of  the  precious  metals  to  higher  culture.  They 
thus  had  a  universally  accepted  real  though  very 
low  value ;  they  fulfilled  all  the  offices  of  money ; 
and  they  promoted  universal  resort,  or  at  least  very 
considerable  resort,  to  what  we  should  call  cash 
transactions  rather  than  barter.  The  fatal  defect 
of  cash  of  this  kind  was  in  the  beads  and  the  shells 
entirely  lacking  real  intrinsic  value,  except  among 
savages  at  a  very  low  level  of  culture. 

1 8.  ABRAHAM'S  CASH  TRANSACTION  IN  REAL  ESTATE. 

For  another  glimpse  of  the  earliest  history  of 
money  we  may  turn  to  the  Biblical  book  of  Genesis. 
We  read  of  Abraham,  after  he  had  left  "  Ur  of  the 
Chaldees,"  the  Babylonian  city  of  his  nativity  near 
the  mouth  of  the  Euphrates,  and  had  lived  a  long 
time,  first  at  Haran  on  the  upper  Euphrates  and 
later  in  Egypt,  that  when  he  came  to  go  "up  out 
of  Egypt,  he,  and  his  wife,  and  all  that  he  had, ' ' 
he  was  "  very  rich  in  cattle,  in  silver,  and  in  gold ;  " 
and  when,  at  a  considerably  later  date,  Sarah  hav- 
ing died  in  the  Land  of  Canaan,  Abraham  wished 
to  purchase  "  a  possession  of  a  burying  place/' 
there  took  place  a  transaction  in  real  estate  of 
which  the  following  is  the  singularly  interesting 
story : 

"And  Abraham  rose  up  before  his  dead  and  spake 
unto  the  children  of  Heth  saying,  I  am  a  stranger 
and  a  sojourner  with  you;  give  me  a  possession  of 


23 

a  burying  place  with  you  that  I  may  bury  my  dead 
out  of  my  sight." 

"And  the  children  of  Heth  answered  Abraham 
saying  unto  him,  Hear  us,  my  lord;  thou  art  a 
prince  of  God  among  us :  in  the  choice  of  our  sep- 
ulchres bury  your  dead ;  none  of  us  shall  withhold 
from  thee  his  sepulchre,  but  that  thou  mayest 
bury  thy  dead." 

"And  Abraham  rose  up,  and  bowed  himself  to 
the  people  of  the  land,  to  the  children  of  Heth. 
And  he  communed  with  them,  saying,  If  it  be  your 
mind  that  I  should  bury  my  dead  out  of  my  sight, 
hear  me,  and  intreat  for  me  to  Ephron  the  son  of 
Zohar,  that  he  may  give  me  the  cave  of  Machpe- 
lah  which  he  hath,  which  is  in  the  end  of  his  field; 
for  the  full  price  let  him  give  it  to  me  in  the  midst 
of  you  for  a  possession  of  a  burying  place." 

"Now  Ephron  was  sitting  in  the  midst  of  the 
children  of  Heth :  and  Ephron  the  Hittite  answered 
Abraham  in  the  audience  of  the  children  of  Heth, 
even  of  all  that  went  in  at  the  gate  of  his  city,  say- 
ing, Nay,  my  lord,  hear  me :  the  field  give  I  thee, 
and  the  cave  that  is  therein  I  give  it  thee ;  in  the 
presence  of  the  sons  of  my  people  give  I  it  thee : 
bury  thy  dead." 

' '  And  Abraham  bowed  himself  down  before  the 
people  of  the  land.  And  he  spake  unto  Ephron  in 
the  audience  of  the  people  of  the  land  saying,  but 
if  thou  wilt  I  pray  thee  hear  me :  I  will  give  the 
price  of  the  field ;  take  it  of  me,  and  I  will  bury 
my  dead  there." 

"And  Ephron  answered  Abraham  saying  unto 
Mm,  My  lord,  hearken  unto  me :  a  piece  of  land 


24 

worth  four  hundred  shekels  of  silver,  what  is  that 
betwixt  me  and  thee?  Bury  therefore  thy  dead." 

"And  Abraham  hearkened  unto  Ephron:  and 
Abraham  weighed  to  Ephron  the  silver  which  he 
had  named  in  the  audience  of  the  children  of  Heth, 
four  hundred  shekels  of  silver,  current  with  the 
merchant.  So  the  field  of  Ephron  which  was  in 
Machpelah,  which  was  before  Mamre,  —  the  field, 
and  the  cave  which  was  therein,  and  all  the  trees 
that  were  in  the  field,  that  were  in  all  the  border 
thereof  round  about,  —  were  made  sure  unto  Abra- 
ham for  a  possession,  in  the  presence  of  the  chiU 
dren  of  Heth,  before  all  that  went  in  at  the  gate  of 
his  city." 

This  transaction  involved  payment  by  Abraham 
of  something  less  than  two  hundred  ounces  of 
silver,  and  the  account  is  conclusive  that  the  silver 
was  current,  not  by  any  fiat  value  of  the  shekel, 
but  by  weight.  The  word  ' '  money, ' '  which  appears 
in  our  English  version,  is  not  in  the  original.  It 
is  by  no  means  certain  that  the  shekels  of  silver 
were  then  known  as  money.  But  there  was  an 
approach  to  it  in  the  fact  that  they  were  in  use  as 
we  use  money,  and  were  "  current  with  the  mer- 
chant." 

19.    FIRST   PLACE   GIVEN  TO    GOLD. 

In  the  next  passage  of  Abraham's  life  we  find 
him  sending  a  confidential  servant,  "the  elder  of 
his  house,  that  ruled  over  all  that  he  had,"  to 
Haran  on  the  Euphrates,  to  procure  from  their 
kindred  a  wife  for  his  son  Isaac.  The  story  relates 
how  the  man  found  Rebekah,  a  cousin  of  Isaac  and 


25 

a  "  damsel  very  fair  to  look  upon,"  among  the 
women  who  had  gone  to  the  well,  on  the  outside 
of  the  city,  to  draw  water ;  and  how  he  presented 
to  Rebekah  "a  golden  ring  of  half  a  shekel  weight 
and  two  bracelets  for  her  hands  of  .ten  shekels 
weight  of  gold."  The  man  further  related  to  the 
family  of  Rebekah  that  his  master  possessed  "flocks 
and  herds,  and  silver  and  gold,  and  men  servants 
and  maid  servants,  and  camels  and  asses:  "  and  he 
"  brought  forth  jewels  of  silver,  and  jewels  of  gold, 
and  raiment,  and  gave  them  to  Rebekah," 

There  seems  to  be  decisive  evidence  here,  not 
only  of  the  possession  by  Abraham  of  gold  as  well 
as  silver,  but  of  the  use  of  gold  in  preference  to 
silver.  The  ring  and  the  bracelets  given  to 
Rebekah  were  of  gold,  and  their  value  was  indi- 
cated by  their  weight.  Whatever  may  have  been 
the  occasional  preference  of  silver,  the  final  choice 
everywhere  of  a  precious  metal  of  the  highest 
intrinsic  value,  both  for  ornament  and  as  a  repre- 
sentative of  value,  gave  gold  a  place  which  silver 
did  not  approach.  It  had  been  so  for  at  least  a 
thousand,  and  perhaps  two  thousand,  years  before 
the  time  of  Abraham.  The  city  of  Abraham's 
nativity,  "Ur  of  the  Chaldees,"  was  the  Liverpool 
or  New  York,  or  we  might  more  exactly  say  the 
Chicago,  of  that  oriental  world.  Other  cities  more 
ancient  and  farther  east  had  risen  earlier  as  seats 
of  ancient  Babylonian  culture.  Ur  was  a  compara- 
tively new  city  at  the  extreme  west  of  southern 
Babylonia.  Its  wealth  and  culture  were  largely 
represented  in  the  art  of  which  rings  and  bracelets 
of  gold  are  a  product.  Those  rings  and  bracelets 


26 

were  a  type  of  value,  and  of  value  honestly  esti- 
mated by  true  weight  in  the  balance. 

20.    THE   GOLD   WEDDING   RING. 

The  gold  "ring  on  the  finger  of  the  bride  to-day 
stands  for  not  less  than  six  thousand  years  of  the 
common  opinion  of  mankind  in  favor  of  gold  as  a 
representative  of  value,  of  real  intrinsic  value, 
whether  for  purposes  of  ornament  and  of  many 
varieties  of  artistic  decoration,  or  for  the  purposes, 
which  we  include  under  the  name  of  money.  No 
doubt  it  might  have  been  otherwise.  There  might 
have  arisen  everywhere,  as  there  did  arise  at  an 
early  period  in  Egypt,  a  preference  for  silver,  a 
higher  estimate  of  the  white  metal  above  the  yellow, 
but  the  conviction  of  mankind  did  not  take  that 
course.  In  proportion  to  the  progress  of  knowl- 
edge and  of  culture,  human  thought,  and  feeling, 
and  practice,  definitely  accepted  gold  as  for  all 
higher  purposes  very  greatly  preferable  to  silver. 
We  may  imagine  the  wedding  ring  and  the  bridal 
bracelets,  not  to  speak  of  the  setting  of  diamonds 
and  other  precious  stones,  done  in  silver  instead  of 
gold;  but,  does  anybody  want  it?  would  anybody 
accept  it?  Suppose  we  give  the  jeweler  an  order  to 
make  a  number  of  dollars  worth  of  gold  —  we  will 
say  seven,  the  sacred  number  of  tradition  —  into  a 
ring ;  and  to  expend  the  same  number  of  dollars  in 
silver  and  make  this  into  a  ring.  Can  we  imagine  a 
single  instance  in  which  the  silver  ring  would  be 
accepted  instead  of  the  gold?  Even  the  mummies 
of  Egypt  are  found,  as  Maspero  tells  us,  "cuirassed 
in  gold. "  And  gold  it  will  be  to  the  end  of  time. 


27 
21.    THE   MOSAIC   SANCTUARY  USE   OF   GOLD. 

The  directions  in  the  book  of  Exodus,  and  the 
account  of  what  was  done  pursuant  to  them,  for 
making  a  tabernacle  sanctuary,  show  a  supreme 
estimation  put  upon  gold,  while  silver  and  brass 
figured  together  for  wholly  secondary  uses.  The 
burnished  brass  in  fact  seems  to  have  been  esteemed 
next  to  gold.  In  making  the  tabernacle,  the  forty- 
eight  boards,  each  a  cubit  and  a  half  wide  and  ten 
cubits  long,  were  overlaid  with  gold.  The  fifty 
clasps  for  the  tabernacle  curtains  were  of  gold, 
while  those  of  a  tent  stretched  over  the  tabernacle 
were  of  brass.  The  only  use  of  silver  was  in  sock- 
ets into  which  the  ends  of  the  boards  were  fitted. 
The  acacia  wood  altars  were  overlaid,  that  of 
incense  with  gold,  and  that  of  burnt  offering  with 
brass.  All  the  fixtures  of  the  latter,  and  the  vessels 
used  with  it,  were  of  brass ;  and  all  those  of  the 
former  of  gold.  In  constructing  a  court  about  the 
tabernacle  the  pillars  rested  in  sockets  of  brass,  and 
had  hooks  and  fillets  of  silver.  Of  brass  were  all 
the  pins  used,  and  all  the  instruments  required  for 
the  tabernacle  service.  The  ark  of  acacia  wood 
was  overlaid  with  pure  gold  within  and  without. 
All  its  trimmings  were  of  gold,  and  the  staves  used 
in  carrying  it  were  overlaid  with  gold.  The  mercy 
seat,  or  cover  of  the  ark,  was  of  pure  gold,  and  the 
cherubim  placed  upon  it  facing  each  other,  figures 
symbolizing  divinity,  were  of  gold.  The  shew- 
bread  table  was  overlaid  with  gold ;  all  its  fixtures 
were  of  gold;  and  the  bowls,  flagons,  spoons,  and 
dishes  used  with  it  were  of  pure  gold.  The  great 


28 

candlestick,  upbearing  seven  lamps  on  its  seven 
branches,  was  "the  whole  of  it  one  beaten  work  of 
pure  gold."  The  breastplate  and  the  ephod  with 
their  rings  and  chains,  for  the  high  priest,  employed 
in  the  making  no  metal  but  gold,  and  their  precious 
stones  were  all  in  settings  of  gold.  Bells  made  of 
gold  hung  from  the  skirts  of  the  ephod,  and  on  a 
plate  of  gold  upon  the  front  of  the  turban  were 
graven  the  words  Holy  to  the  Lord.  The  amounts 
used  of  the  three  metals  "in  all  the  work  of  the 
sanctuary, ' '  were,  29  talents  and  730  shekels  of  gold ; 
loo  talents  and  1,775  shekels  of  silver  (each  of  100 
sockets  taking  one  talent) ;  and  70  talents  and  2,400 
shekels  of  brass. 

22.    THE   GOLD    OF    SOLOMON'S    TEMPLE. 

The  use  of  gold  by  King  Solomon,  of  magnificent 
Hebrew  memory,  affords  one  of  the  most  signifi- 
cant historical  illustrations  of  the  law  of  value  under 
which  gold  commands  respect  far  above  every 
other  precious  commodity.  The  marvelous  "house 
which  King  Solomon  built  for  the  Lord,"  of  hewn 
stone,  and  cedar,  and  gold,  every  part  of  the  con- 
struction-material made  ready  for  its  place  and  use 
before  it  was  brought,  so  that  "there  was  neither 
hammer,  nor  axe,  nor  any  tool  of  iron  heard  in  the 
house,  while  it  was  in  building,"  bore  witness  as 
splendid  as  it  was  costly  to  the  supreme  estimate 
naturally  put  upon  gold.  The  most  holy  place 
forming  the  rear  third  of  the  structure  was  wholly 
"overlaid  with  pure  gold."  Moreover,  we  read: 

"  Solomon  overlaid  the  house  within  with  pure 
gold ;  and  he  drew  chains  of  gold  across  before  the 


29 

most  holy  place;  and  he  overlaid  it  with  gold. 
And  the  whole  house  he  overlaid  with  gold,  until 
all  the  house  was  finished;  also  the  whole  altar 
that  belonged  to  the  most  holy  place  he  overlaid 
with  gold.  And  in  the  most  holy  place  he  made 
two  cherubim  of  olive  wood,  each  ten  cubits  high. 
.  .  .  And  the  wings  of  the  cherubim  were 
stretched  forth,  so  that  the  wing  of  the  one  touched 
the  one  wall,  and  the  wing  of  the  other  cherub 
touched  the  other  wall ;  and  their  wings  touched  one 
another  in  the  midst  of  the  house ;  and  he  overlaid 
the  cherubim  with  gold.  And  the  floor  of  the  house 
he  overlaid  with  gold  within  and  without.  And 
two  doors  of  olive  wood,  carved  with  carvings  of 
cherubim  and  palm  trees  and  open  flowers,  he 
overlaid  with  gold.  And  [the  great  folding  doors 
of  the  temple  itself,  carved  with  cherubim  and  palm 
trees  and  open  flowers]  he  overlaid  .with  gold  fitted 
upon  the  graven  work." 

"And  Solomon  made  all  the  vessels  that  were  in 
the  house  of  the  Lord :  the  golden  altar,  and  the 
table  whereupon  the  shewbread  was,  of  gold ;  and 
the  candlesticks,  five  on  the  right  side,  and  five  on 
the  left,  before  the  most  holy  place,  of  pure  gold ; 
and  the  flowers,  and  the  lamps,  and  the  tongs,  of 
gold;  and  the  cups,  and  the  snuffers,  and  the 
basons,  and  the  spoons,  and  the  firepans,  of  pure 
gold;  and  the  hinges,  both  for  the  doors  of  the 
inner  house,  the  most  holy  place,  and  for  the  doors 
of  the  house,  of  the  temple,  of  gold." 


30 

23.    SOLOMON   SOLD   BONDS   AND   BOUGHT   GOLD. 

The  London  of  the  Ancient  East,  a  thousand 
years  before  the  Christian  era,  was  the  Phoenician 
city  of  Tyre,  the  centre  of  a  broadly  advanced  civil- 
ization, and  the  seat  of  a  rich  commerce.  The 
Hebrew  record  tell  us  that  Hiram,  king  of  Tyre, 
"had  furnished  Solomon  with  cedar  trees  and  fir 
trees,  and  with  gold,  according  to  all  his  desire," 
during  twenty  years,  "  wherein  Solomon  had  built 
the  two  houses,  the  house  of  the  Lord  and  the 
king's  house;  "  and  that  "Hiram  sent  to  the  king 
six  score  talents  of  gold."  To  pay  for  this  gold 
"King  Solomon  gave  Hiram  twenty  cities  in  the 
land  of  Galilee/'  As  nearly  as  was  possible  for 
that  time  Solomon  sold  bonds  and  bought  gold ;  and 
when  the  bonds  were  due  he  paid  with  "cities  in 
the  land  of  Galilee, ' '  which  the  story  says  so  greatly 
disgusted  Hiram  when  he  "came  out  from  Tyre  to 
see  the  cities  which  Solomon  had  given  him,"  that 
"he  called  them  the  land  of  Cabul  (Dirty)." 

24.  SOLOMON'S  DEMONETIZATION  OF  SILVER. 

We  read  also  that  "King  Solomon  made  a  navy 
of  ships  in  Ezion-geber,  on  the  shore  of  the  Red 
Sea,  in  the  land  of  Edom.  And  Hiram  sent  in  the 
navy  his  servants,  shipmen  that  had  knowledge  of 
the  sea,  with  the  servants  of  Solomon.  And  they 
came  to  Ophir,  and  fetched  from  thence  gold,  four 
hundred  and  twenty  talents,  and  brought  it  to  King 
Solomon." 

And  when  the  Queen  of  Sheba  "came  to  Jerusa- 
lem with  a  very  great  train,  with  camels  that  bore 
Spices,  and  very  much  gold,  and  precious  stones," 


"she  gave  the  king  an  hundred  and  twenty  talents 
of  gold,  and  of  spices  very  great  store,  and  precious 
stones. ' '  And  ' '  the  weight  of  gold  that  came  to 
Solomon  in  one  year  was  six  hundred  three  score 
and  six  talents  of  gold,  beside  the  chapmen  [bring- 
ing gold],  and  the  traffic  of  the  merchants  and  of 
all  the  kings  of  the  mingled  people,  and  of  the 
governors  of  the  country.  And  King  Solomon 
made  two  hundred  targets  of  beaten  gold; 
and  three  hundred  shields  of  beaten  gold.  More- 
over,  the  king  made  a  great  throne  of  ivory, 
and  overlaid  it  with  the  finest  gold.  And  all  King 
Solomon's  drinking  vessels  were  of  gold,  and  all 
the  vessels  of  the  house  of  the  forest  of  Lebanon 
were  of  pure  gold;  none  were  of  silver;  it  was 
nothing  accounted  of  in  the  days  of  Solomon. 
.  .  .  The  king  made  silver  to  be  in  Jerusalem 
as  stones  for  abundance." 

This  depreciation  of  silver  by  reason  of  its  abun- 
dance, and  preference,  for  all  purposes  of  wealth 
and  richness,  of  gold,  in  consequence  of  the  fact 
that  gold  could  be  had,  were  the  result  of  the  natu- 
ral operation  of  ordinary  law.  Nothing  but  extreme 
rarity  and  very  high  cost  can  bring  silver  anywhere 
near  to  gold  in  common  estimation,  and  with  an 
ample  supply  of  gold  and  extreme  abundance  of 
silver,  nothing  can  save  the  latter  from  being 
thrown  out  as  a  metal  highly  valued  by  the  side  of 
gold. 

25.    THE  VULGAR  DISPRAISE   OF   GOLD. 

Among  the  most  ignorant,  or  the  most  mendacious, 
of  human  prejudices,  is  that  which  has  been  directed 
against  gold,  as  the  most  real  and  most  esteemed 


32 

.article  of  wealth.  Nothing  else  which  is  within 
human  reach  so  perfectly  represents  sure  and 
secure  value.  Precious  stones,  even  the  finest, 
cannot  be  known  for  value  by  assay  for  purity  and 
by  weight,  but  only  by  the  opinion  of  experts,  and 
of  the  market.  A  hoard  of  diamonds  valued  to-day 
at  a  million  might  prove  ten  years  later,  in  expert 
and  market  opinion,  worth  very  much  less  than 
that,  especially  if  the  occasion  to  realize  their  value 
in  money  were  sudden  and  peremptory.  A  state 
treasury  filled  with  diamonds  at  the  cost  of  a  hun- 
dred millions  in  gold  might  not  prove  worth  half 
that  for  instant  conversion  into  money. 

The  sureness  and  security  of  values  in  silver, 
even  to  hold  for  a  short  time,  and  still  more  to  carry 
for  an  indefinite  time,  and  to  bring  into  use  at  any 
sudden  moment,  do  not  approach,  and  cannot  be 
made  to  approach,  the  sureness  and  security  of 
values  in  gold.  Values  in  silver  may  slump  dis- 
astrously. Values  in  gold  will  at  the  worst  only 
decline,  and  that  moderately.  For  high  value, 
steadily  maintained,  and  certainly  known,  gold  is 
out  of  reach  above  silver. 

26.    ANTI-GOLD   FANATICISM. 

The  perverse  ignorance  of  fanaticism,  if  it  be  not 
the  perverse  mendacity  of  dishonesty,  never  went 
more  wide  of  the  mark  of  truth  than  an  orator  of 
silverism  did  when  he  said:  "It  has  been  well 
:said  that  gold  in  its  last  analysis  is  the  sweat  of  the 
poor  and  the  blood  of  the  brave.  You  can  rob  this 
world  of  gold  and  put  enough  silver  in  the  world 
to  make  up  for  the  loss  of  gold  and  commerce  will 


33 

move  on,  but  rob  this  world  of  its  silver,  if  you  will, 
and  try  to  fill  its  place  with  gold,  and  see  how  long 
your  system  will  stand."  (W.  J.  Bryan,  speech  at 
Syracuse,  N.  Y.,  Aug.  26,  1896.) 

Gold  in  its  last  analysis  is  the  most  precious 
product  of  nature,  the  richest  material  gift  of  the 
Creator,  and  the  commodity  best  representative  of 
high,  steady,  and  sure  value.  A  world  without 
silver  would  lack  a  most  useful  material  for  smaller 
secondary  money,  but  could  easily  enough  find  a 
substitute  in  a  mixture  of  gold  and  copper.  With- 
out gold  the  world  would  lack  its  supreme  and  most 
useful  precious  substance  and  form  of  wealth, 
the  supreme  stay  and  instrument  of  commerce, 
and  altogether  the  richest  material  of  ornament 
and  art. 

It  is  a  hoodlum  and  rascal  spleen  which  raises  a 
cry  against  wealth,  and  especially  against  gold  as 
the  type  of  wealth,  in  terms  of  maudlin  concern  for 
the  poor,  the  toiling,  and  the  suffering  of  mankind. 
The  mendacity  of  the  complaint  is  not  less  than  its 
absurdity,  in  face  of  the  universal  dominance  in 
culture  throughout  the  world,  not  indeed  of  per- 
fect justice  and  kindness,  but  of  an  immensely 
developed  and  steadily  gaining  social  order  which 
has  perfect  justice  and  kindness  for  its  ideal.  The 
margin  of  wrong  is  not  inconsiderable  anywhere 
that  we  scrutinize  human  developments ;  but  wealth 
under  its  accumulated  form,  held  in  the  grasp  of 
law,  necessarily  alive  to  wise  self-interest,  and 
under  pressure  of  exceedingly  strong  agencies  of 
humanity  and  religion,  follows  lines  of  truth  and 
Tight  quite  as  closely  as  any  other  form  of  the 
3 


34 

organic  interests  of  mankind.  If  the  enthusiasts, 
not  to  say  the  fanatics,  of  labor,  were  as  subject  to 
reason  and  knowledge,  and  as  strictly  under  control 
of  law  and  opinion,  as  wealth  is,  the  most  serious 
labor  problems  would  disappear. 

27.    GOLD   AS  A   RULE   OF   HONESTY. 

A  supreme  service  rendered  by  gold  is  that  of  a 
standard  of  honest  reality  in  values.  The  intense 
scorn  and  hatred  of  gold  which  politicians  have 
been  known  to  feel  or  to  affect,  has  been  in  great 
part  the  revolt  of  a  sort  of  rascal  libertinism  against 
a  veritable  rule  of  honest  reality.  To  speculative 
libertinism  in  politics,  the  dream  of  making  that 
real  which  is  not  real,  and  of  finding  thereby  a 
short  and  easy  way  to  success  in  life,  finds  gold  as 
a  standard  of  reality  in  value  very  much  in  its  way. 
The  absolute  clearness  and  certainty  with  which 
gold  represents  high  value,  and  exceptionally 
steady  and  sure  value,  had  given  it  a  supreme  posi- 
tion before  Solomon  built,  or  Moses  planned,  or 
Abraham  traveled. 

The  same  Senator  Stewart  who  at  a  somewhat 
later  date  became  a  special  pleader  for  Free  Silver, 
made  this  record  in  1874:  Jan.  13  —  "There  is 
nothing  so  satisfactory  as  the  real  measure  of  value 
—  gold."  Feb.  20  —  "Gold  is  the  universal  stan- 
dard of  the  world. ' '  June  1 1  —  "  I  do  not  care  how 
much  you  discuss  it,  or  how  many  resolutions  you 
pass ;  they  do  not  make  any  difference.  You  must 
come  to  the  same  conclusion  that  all  other  people 
have,  that  gold  is  recognized  as  the  universal  stan- 
dard of  value.  It  is  idle  to  talk  about  compromising 


35 

on  any  other  measure  of  value ;  the  world  will  not 
accept  it." 

The  notorious  creator  of  "Free  Silver  "  as  a  factor 
in  American  politics,  Senator  Jones,  made  in  like 
manner  a  record  of  honest  truth  when  he  said, 
April  i ,  1 874 :  —  "I  believe  the  sooner  we  come  down 
to  a  purely  gold  standard  the  better  it  will  be  for 
the  country.  Did  any  country  ever  accumulate 
wealth,  achieve  greatness,  or  attain  high  civilization 
without  a  standard  of  value?  And  what  but  gold 
could  be  that  standard?  .  .  .  Gold  is  so  exact  a 
measure  of  human  effort  that  when  it  is  exclusively 
used  as  money  it  teaches  the  very  habit  of  honesty. ' ' 

Through  Nevada  impecuniosity  in  respect  of 
gold,  and  use  to  excess  of  silver,  at  an  ever  declin- 
ing, always  uncertain,  and  altogether  slippery 
value,  Senators  Stewart  and  Jones  came  later  under 
impressions  in  regard  to  money  which  enabled 
them  to  grossly  falsify  the  facts  of  gold.  But  the 
facts  are  not  altered. 


CHAPTER  III. 

THE  GROWTH  OF  MONEY:      ORIGIN  OF 
STAMPED    COIN. 

28.    THE   NATURAL   HISTORY   OF   MONEY. 

Mr.  W.  Stanley  Jevons,  in  his  "Money  and  the 
Mechanism  of  Exchange, ' '  one  of  the  best  books  for 
thorough  study  of  the  subject,  has  the  following 
under  the  head  of  "Early  History  of  Money:  " 

4 '  The  natural  history  of  money  is  almost  a  virgin 


subject,  upon  which  I  should  like  to  dilate ;  but  the 
narrow  limits  of  my  space  forbid  me  from  attempt- 
ing more  than  a  brief  sketch  of  the  many  interest- 
ing facts  which  may  be  collected." 

The  chapter  which  Mr.  Jevons  goes  on  to  make, 
after  this  remark,  fills  ten  pages  with  facts  which 
bear  less  upon  the  history  of  true  money  than 
upon  the  story  of  what  commodities  have  been 
made  to  serve  in  place  of  money,  without  actually 
fulfilling  conditions  which  distinguish  money  used 
for  cash  transactions  from  commodities  made 
to  serve  the  purposes  of  barter.  The  matter  is 
commonly  dealt  with  much  as  if  one  should 
attempt  a  story  of  ocean  steamers  by  collecting 
descriptions  of  canoes,  rafts,  launches,  sailboats, 
etc.,  as  means  of  travel  by  water,  assuming  that  an 
ocean  steamer  is  in  the  same  category  because  it  is 
a  means  of  travel  by  water ;  whereas  the  fact  is  that 
an  ocean  steamer  is  essentially  the  application  of 
the  steam  engine  to  travel  by  water. 

The  mistake  thus  made  is  that  of  counting  as 
money  various  non-monetary  commodities  which 
have  been  used,  as  we  have  already  shown,  not 
properly  as  money,  but  as  aids  to  trade,  somewhat 
taking  the  place  of  money. 

29.    THE   ESSENTIAL   FACT   OF   MONEY. 

Money  essentially  means  the  application  of  a 
precious  commodity,  notably  a  precious  metal,  or  a 
substitute  representative  of  such  metal,  to  certain 
uses  found  necessary  in  the  world  of  trade  at  large. 
How  at  a  pinch  various  non-monetary  commodities, 
as  oxen,  tobacco,  and  various  products,  have  been 


37 

used  to  make  shift  with  for  lack  of  money,  or  how 
savages  have  made  low-culture  money  of  pretty 
shells  or  shell  beads,  valued  somewhat  as  ornament 
and  thus  available  as  a  cheap  money,  is  hardly  per- 
tinent to  the  natural  history  of  true  money,  as 
intelligence  and  experience  now  understand  and 
employ  it. 

30.    ERROR   OF   COMMON  VIEW. 

Mr.  Horace  White  says,  on  the  opening  page  of 
his  "  Money  and  Banking  "  that  "  money  is  anything 
that  serves  as  a  common  medium  of  exchange  and 
measure  of  value  —  the  agreed  measure  of  any 
time,  place,  or  people."  He  remarks,  with  refer- 
ence to  the  fiat  folly  of  Virginia  in  trying  to  make 
tobacco  go  as  tender  in  place  of  money,  that  "Vir- 
ginia grew  her  own  money  for  nearly  two  centu- 
ries, ' '  adding  that  ' '  hardly  any  form  of  currency 
could  have  been  worse,  the  fluctuations  in  its  value 
being  extreme  and  incessant,  and  the  social  disor- 
ders produced  by  it  enormous." 

Yet  Mr.  White  tells  us  that  "the  word  money,  as 
used  in  the  colonies,  always  meant  metallic 
money;"  that  a  petition  "asked  that  a  sub-treas- 
urer be  sent  to  the  colony  to  receive  the  rents  and 
that  he  be  instructed  not  to  exact  money  'whereof 
we  have  none  at  all,'  but  to  collect  'the  true  value 
of  the  rent  in  commodity ; '  '  that  it  was  enacted, 
because  "  many  and  great  inconveniences  do  daily 
arise  by  dealing  for  money,"  "that  all  money  debts 
made  since  the  26th  day  of  March,  or  hereafter 
made,  shall  not  be  pleadable  or  recoverable  in  any 
court  of  justice;  "  that  "in  1742  it  was  enacted  that 


38 

persons  not  growing  tobacco  might  pay  taxes  and 
fees  to  public  officers  'in  current  money  at  such 
prices  and  rates  for  tobacco  as  shall  be  settled  by 
the  courts  of  their  respective  counties;'  "  that 
again,  when  severe  drought  had  cut  off  the  tobacco 
crop,  "it  was  enacted  that  all  tobacco  debts,  taxes, 
and  fees,  might  be  paid  in  money  at  i6s.  8d.  per 
100  Ibs. ;  "  and  that  "traders  had  generally  kept 
their  books  in  terms  of  silver  money,  although  their 
dealings  had  been  in  tobacco,"  —  facts  which 
clearly  show  that  the  whole  business  was  one  of 
senseless  fiatism  seeking  to  regulate  barter  by  mak- 
ing a  fiat  price  of  tobacco  and  giving  this  com- 
modity a  legal  tender  character.  Nothing  so  absurd 
as  counting  tobacco  as  money  was  for  a  moment 
thought  of.  In  the  great  dearth,  or  almost  total 
absence,  of  money,  an  attempt  was  made  to  get 
along  without  money  by  legal  regulation  of  barter. 
The  true  idea  of  money  was  not  lost.  It  is,  there- 
fore, not  historically  correct,  and  certainly  not  true 
to  any  proper  idea  of  money,  to  say  that  Virginia 
used  tobacco  as  money.  It  was  instead  of  money, 
and  to  get  along  without  money,  by  making  regu- 
lated barter  take  the  place  of  money  or  cash  trans- 
actions. 

31.    EARLY   GREEK   MAKING    OF    MONEY. 

The  facts  already  given,  in  Ch.  II.,  under  the 
head  of  "The  Earliest  Origin  and  Idea  of  Money," 
show  how  gold,  silver,  and  a  mixture  of  the  two 
known  as  electron,  together  with  copper,  naturally 
came  to  the  front  as  money,  each  according  to  its 
value  by  weight,  and  with  a  tendency  of  the  most 


39 

precious  to  take  the  lead ;  copper  being  in  use  in 
pieces  as  a  cheap  and  easy  common  money  for 
counting  value  and  for  making  small  change. 

Further  evidence  in  regard  to  the  true  natural 
history  of  money  may  be  cited  from  the  latest  of 
our  works  of  authority  on  the  history  of  Greece, 
Adolph  Holm's  "  History  of  Greece" 

To  get  a  clear  idea  of  the  places  referred  to,  a 
glance  at  a  map  of  ancient  Greece  will  enable  the 
reader  to  see  the  position  of  Argos,  on  the  east  side 
of  the  Peloponnese  opposite  to  Attica,  with  the 
Saronic  Gulf  between  them,  and  midway  in  that 
gulf  the  island  ./Egina.  The  city  of  Argos  was 
regarded  by  the  Greeks  as  their  most  ancient  city, 
and  one  of  its  most  notable  kings  was  Pheidon. 
Looking  directly  across  from  Greece  to  Asia  Minor 
the  situation  of  Lydia  is  shown.  Lydia  is  of  impor- 
tance in  the  history  as  representing  Greek  civiliza- 
tion before  it  had  been  planted  in  Greece  itself.  If 
nov/  \ve  remember  the  position  of  Argos,  where 
Pheidon  is  said  to  have  been  seventh  in  its  list  of 
early  kings,  we  shall  be  prepared  to  understand 
the  statement  made  by  Holm  in  his  history. 

44 Pheidon/'  he  says,  "became  famous  according 
to  Herodotus,  by  establishing  a  standard  of  weights 
and  measures  for  the  Peloponnese.  He  is  said  to 
have  been  the  first  to  stamp  coins  in  Greece.  Long 
afterwards  in  the  Herseum  near  Argos  could  be 
seen  bars  of  silver,  obeliskoi,  which  Pheidon  had 
dedicated  to  commemorate  his  having  done  away 
with  this  kind  of  money  and  having  replaced  it  by 
stamped  coins.  His  mint  was  in  y£gina. 

"It  is  beyond  question  that  Pheidon  occupied  a 


40 

very  important  position  in  Greece.  That  he  was 
master  of  ^Egina  is  proved  by  the  statement  that 
he  stamped  his  coins  in  that  island.  His  appear- 
ance as  president  of  the  Olympic  games  was  in  the 
eighth  Olympiad.  Pheidon,  however,  has  gained 
an  especially  brilliant  reputation  by  his  supposed 
introduction  of  a  standard  of  weights  and  measures 
and  of  coinage  into  Greece,  or,  according  to  Hero- 
dotus, into  the  Peloponnese. 

"In  the  civilized  countries  of  Asia  and  Africa  the 
precious  metals  had  long  served  as  a  means  of 
exchange,  but  they  were  taken  according  to  weight, 
and  the  weight  had  in  every  case  to  be  verified  by 
the  scales.  Then  the  coin  came  into  existence  by 
the  weight  of  a  piece  of  metal  being  guaranteed 
by  an  official  stamp,  and  thus  the  coin  can  be  used 
for  payment  without  further  verification.  The  idea 
of  using  the  stamp  for  this  purpose  originated,  ac- 
cording to  the  ancients,  not  in  the  large  civilized 
countries  of  Central  Asia,  nor  in  Egypt,  but  in  Asia 
Minor,  or,  according  to  the  opinions  of  some  writ- 
ers, with  Pheidon  in  Greece.  We  must  come  to  the 
conclusion  that  the  discovery  was  only  made  at  one 
place :  in  which  case,  as  Asia  Minor  took  the  lead 
generally  in  civilization,  Greece  would  have  bor- 
rowed it  from  that  country.  In  Asia  Minor,  Lydia 
was  said  to  have  been  the  first  country  that  used 
coins.  They  were  bits  of  the  pale,  impure  gold 
known  as  electrum  or  electron,  of  which  many  have 
been  preserved  to  the  present  day.  The  coins  of 
Pheidon,  on  the  other  hand,  were  made  of  silver. 
Long  afterwards,  in  the  Heraeum,  near  Argos, 
could  be  seen  bars  of  silver,  obeliskoi,  which  Phei- 


don  had  dedicated  to  commemorate  his  having 
done  away  with  this  kind  of  money;  and  having 
replaced  it  by  stamped  coins.  Thus  the  originality 
of  Pheidon  may  have  consisted  in  his  having  intro- 
duced silver  coins.  This  he  is  said  to  have  done 
in  ^Egina,  which  means  that  the  ^Egina  standard 
of  coinage  and  the  manufacture  of  the  ^Egina  coin 
are  ascribed  to  him.  The  ^Egina  standard  was 
originally  the  most  widely  used  in  Greece".  The 
coins  bore  a  tortoise  as  a  distinguishing  mark.  At 
first  they  had  no  inscription,  but  only  images. 
Whatever  Pheidon's  share  in  the  introduction  of 
coinage,  he  took  an  active  part  in  the  regulation  of 
weights  and  measures  in  Greece,  and  did  much  to 
make  the  Greeks  a  commercial  people  of  the  first 
rank. 

"Much  research  and  many  volumes,"  Holm  adds 
in  a  note,  "have  been  devoted  to  the  origin  of  coin- 
age. In  the  opinion  of  the  ancients,  the  question 
lay  between  Pheidon  and  the  Lydians.  Herodotus 
is  in  favor  of  the  Lydians.  Some  ancient  Lydian 
coins  have  come  down  to  us,  made  out  of  pale  Pac- 
tolus  gold  or  electrum ;  also  some  old  y£gina  coins 
with  the  tortoise.  Barclay  Head,  in  his  introduc- 
tion to  "  The  Coins  of  the  Ancients"  asserts  that  the 
Lydians  first  made  lumps  of  metal  into  money  by 
stamping  them,  and  that  the  Greeks  of  Asia  Minor 
were  the  first  to  put  regular  images  on  the  stamp, 
and  that  in  any  event  they  were  the  first  to  engrave 
names  upon  it.  But  it  is  not  quite  so  certain  that 
the  Lydians  were  really  the  inventors  of  coins. 
We  know  that  rings  were  used  as  a  currency  by 
weight  in  Egypt.  If  the  ring  shape  is  compatible. 


42 

with  the  idea  of  a  coin,  the  Lydians  can  hardly  have 
invented  coinage.  If,  on  the  contrary,  the  lump 
shape  is  essential,  the  honor  rests  with  the  Lydians. " 

32.    MR.    GROTE   ON   PHEIDON'S   COINAGE. 

In  regard  to  this  celebrated  king  of  Argos,  Phei- 
don,  who  is  known  to  have  been  president  of  the 
Olympic  games  in  the  year  747  B.  C.,  and  who 
enjoys  the  distinction  of  having  been  the  first 
Greek  ruler  to  coin  metal  money,  and  the  first  to 
establish  a  scale  of  weights  and  measures  which  was 
widely  adopted,  Mr.  Grote,  in  his  "History  of 
Greece, ' '  *  says : 

"He  first  coined  both  copper  and  silver  money 
in  ^Egina,  and  first  established  a  scale  of  weights 
and  measures  which,  through  his  influence,  became 
adopted  through  Peloponnesus  and  acquired  ulti- 
mately footing  both  in  all  the  Dorian  states  and  in 
Boeotia,  Thessaly,  Northern  Hellas  generally,  and 
Macedonia,  under  the  name  of  the  ^Eginaean  scale. 
„  .  .  The  Babylonian  talent,  mina,  and  drachma 
(one  hundred  drachmae  to  a  mina  and  sixty  minae 
to  a  talent)  are  identical  with  the  ^Eginsean.  The 
word  mina  is  of  Asiatic  origin ;  and  it  has  been 
rendered  highly  probable  that  the  scale  circulated 
by  Pheidon  was  borrowed  immediately  from  the 
Phoenicians  and  by  them,  originally,  from  the 
Babylonians.  The  Babylonian,  Hebraic,  Phoeni- 
cian, Egyptian,  and  Grecian  scales  of  weight  (which 
were  subsequently  followed  wherever  coined 
money  was  introduced)  are  found  to  be  so  nearly 

*  Vol.  II.  pp.  240-241. 


43 

conformable,  as  to  warrant  a  belief  that  they  are 
all  deduced  from  one  common  origin ;  and  that 
origin  the  Chaldsean  priesthood  of  Babylon.  It  is 
to  Pheidon  that  the  Greeks  owe  the  first  introduc- 
tion of  the  Babylonian  scale  of  weight  and  the  first 
employment  of  coined  and  stamped  money." 

33.    DR.    CURTIUS   ON   PHEIDON'S    COINAGE. 

The  interest  of  the  early  Greek  facts  appears  still 
further  from  the  following  account  by  Dr.  Curtius: 
"The  times  of  the  Homeric  trade  by  barter  were 
past.  The  lonians  had  long  learnt  from  the  Lydi- 
ans  to  shape  precious  metals  in  accurately  weighed 
pieces  and  to  provide  them  with  the  signs  of  their 
value.  All  the  islands  and  coasts  were  acquainted 
with  this  Ionic  gold,  viz.,  the  bullet-shaped  gold 
pieces  of  a  pale  yellow  color,  formed  out  of  the 
electrum  of  the  Pactolus.  But  men  hesitated  to 
accept  the  strange  money  which  possessed  no  cur- 
rency in  the  land.  Every  business  transaction  in 
the  Peloponnesian  harbors  gave  rise  to  a  complica- 
tion of  difficulties.  For  in  Argolis  also  there 
existed  none  but  a  clumsy  kind  of  money,  of  iron 
and  bronze,  founded  (or  cast)  in  bars,  which  were 
weighed  out  to  each  customer,  totally  unsuited  on 
account  of  its  form,  its  weight,  and  the  inequality 
of  its  value  for  purposes  of  foreign  trade.  Pheidon 
accomplished  a  vital  reform,  by  completely  adopt- 
ing the  system  of  weights  and  money  which  Phoe- 
nicians and  Lydians  had  spread  from  Babylon  over 
the  whole  of  Asia.  The  talent,  a  term  used  by 
Homer  to  express  a  perfectly  inde6nite  value, 
henceforth  became  in  the  European  country  also 


44 

the  fixed  unit  for  weights  and  money ;  it  was 
divided  into  sixty  parts,  for  which  the  Semitic 
name  of  mna  or  mina  was  retained,  and  each  mina 
again  was  divided  into  one  hundred  drachma.  The 
ancient  bar  money  was  suspended  in  the  temple  of 
Hera  as  a  reminiscence  of  ancient  times,  and  the 
new  money  was  coined,  first  in  Euboea,*  then,  on 
the  territory  of  Argos  itself,  in  [the  island  of] 
^gina.f  On  this  island  was  instituted,  under  pub- 
lic inspectors,  the  first  Peloponnesian  silver-mint, 
and  the  tortoise,  the  smybol  of  the  ancient  Phoeni- 
cian goddess  of  the  sea  and  of  trade,  was  adopted  as 
a  stamp.  At  the  same  time  a  regular  system  was 
introduced  of  liquid  and  solid  measures. 

"The  grand  style  in  which  Pheidon  carried  out 
these  reforms  shows  that  they  were  not  intended 
for  the  narrow  territory  of  a  single  city.  They  are 
the  undertaking  of  a  man  who  desired  to  found  an 
empire,  and  who  had  received  the  first  impulse 
towards  this  desire  from  Asia,  where  in  the  rear  of 
the  Hellenic  cities  (of  Asia  Minor  —  the  lonians) 
existed  vast  empires  with  well-ordered  systems  of 
commerce."  J 

*  Euboea  was  a  specially  convenient  seat  of  commerce,  an  island 
stretching  along  from  opposite  Attica  in  the  south  to  opposite 
Thessaly  in  the  north,  and  separated  from  the  eastward  mainland 
of  Greece  by  a  narrow  strait  of  water. 

f  ^Egina  was  an  island  in  the  Saronic  gulf,  between  Attica  and 
Corinth,  where  it  naturally  became  a  notable  centre  of  trade  of 
shipowning  and  naval  development,  and  of  manufactures.  The 
shipowners  of  ^Egina  became  in  later  times  the  richest  merchants 
of  the  Greek  world.  They  had  trading  places  in  distant  parts,  and 
became  a  seat  of  naval  power.  Dr.  Curtius  says  of  them:  "They 
deemed  no  way  of  making  money  beneath  them.  Everywhere 
^Eginetans  were  to  be  found,  huckstering  with  utensils  of  bronze, 
vessels  of  earthenware,  ointments,  and  other  articles,  which  were 
produced  on  ^Egina  in  large  manufactories."  (II.  227.) 

\  History  of  Greece,  I.  272,  273. 


45 

34-    GROWTH   OF   GREEK   MONEY. 

The  essential  facts  of  the  growth  of  Greek  money 
-are  clearly  summarized  in  the  following  passages 
of  Gardner  and  Jevons'  " Manual  of  Greek  Antiqui- 
ties" a  very  recent  work  of  high  authority. 

4 '  It  is  quite  certain  that  in  Homer's  time,  although 
coins  were  not  yet  in  use,  bars  and  rings  of  metal 
of  fixed  weight  were  current  and  generally  accepted 
in  all  kinds  of  mercantile  transactions.*  Small 
wedges  of  silver  were  the  principal  medium  of 
exchange  in  Greece  very  long  before  the  seventh 
century  B.  C.,  and  of  these  six  were  reckoned  as  a 
drachma  or  handful.  Indeed,  from  very  remote 
times  the  Babylonians  and  the  Egyptians  had 
formed  for  themselves  systems  of  currency  in  metal 
bars,  and  had  transmitted  the  custom  to  the  nations 
of  Asia  Minor  and  Syria,  with  whom  the  Greeks 
were  in  constant  contact.  We  cannot  fix  the  date 
at  which  the  custom  spread  to  Greece  also,  but  it 
must  have  been  very  early.  And  when  bars  of 
metal  of  fixed  weight  and  fineness  are  in  circula- 
tions, nothing  is  required  to  turn  these  into  coins 
except  the  addition  of  an  official  stamp." 

' '  It  has  long  been  disputed  what  people  were  the 


*  This  is  a  much  needed  correction  of  the  common  statement  that 
oxen  were  the  money  of  Homer's  time.  The  principal  riches  of 
the  chiefs,  of  whom  we  read  in  Homer,  consisted  in  their  flocks 
and  herds  and  their  slaves,  and  trade  almost  always  meant  exchang- 
ing cattle  for  whatever  they  bought  of  the  foreign  merchants  who 
visited  them.  It  was  thus  natural  to  speak  of  values  in  terms  of 
cattle,  but  this  reference  to  habitual  and  familiar  barter  by  no 
means  excluded  the  existence,  and  frequency  even,  of  cash  trans- 
actions, in  which  the  money  consisted  of  bars,  and  rings  of  gold, 
or  wedges  of  silver,  of  fixed  weight  and  fineness,  which  only 
needed  to  have  a  stamp  on  them  to  make  a  near  approach  to  our 
modern  coin. 


46 

first  to  substitute  in  their  currency  coins  proper, 
that  is,  properly  stamped  lumps  of  metal,  for  the 
bars  of  metal  of  fixed  weight  which  had  preceded 
them.  Modern  opinion  is  inclined  to  the  view  that 
this  discovery  belongs  to  the  Lydians.  The  first 
coins  were  made  neither  of  gold  nor  silver  but  of  a 
yellow  metal  compounded  of  the  two  and  called 
electrum,  which  was  found  in  large  quantities  in 
the  beds  of  the  Pactolus  and  other  rivers  of  Asia 
Minor.  About  the  reign  of  Gyges  it  occurred  to 
some  wise  man  of  the  Lydian  court  to  have  small 
balls  of  electrum  marked  with  the  official  stamp  of 
a  city  or  a  temple,  to  guarantee  both  its  weight  and 
its  quality.  Miletus  and  other  Greek  cities  of  Asia 
adopted  the  plan  from  their  neighbors,  and  as  early 
as  the  seventh  and  sixth  centuries  before  our  era  a 
considerable  quantity  of  electrum  coins  was  circu- 
lating on  the  shores  of  the  ^Egean  sea  and  the 
Euxine." 

"Pheidon,  king  of  Argos,  is  supposed  to  have 
been  the  first  to  issue  money  in  Greece  proper. 
This  he  struck  in  the  Island  of  yEgina.  The  metal 
he  used  was  silver,  silver  being  the  normal  cur- 
rency of  Greece,  as  gold  was  of  Asia  and  copper  of 
Italy.  The  type  was  the  tortoise,  the  symbol  of 
the  Venetian  goddess  of  the  moon  and  of  trade, 
whom  the  Greeks  identified  with  their  own  Aphro- 
dite. There  is  no  trace  of  any  Athenian  coinage 
before  the  time  of  Solon;  for  all  Attic  money  is 
struck  on  the  monetary  standard  introduced  by  him. 
Nor  do  most  of  the  cities  of  Greece  proper  seem 
to  have  issued  money  until  the  time  of  the  Persian 


wars. ' ' 


47 

"By  that  time  Persia  had  a  well  established  cur- 
rency both  in  gold  and  silver.  Croesus  had  intro- 
duced in  Lydia  a  regular  state  coinage  in  these  two 
metals,  in  place  of  the  irregularly  issued  pieces  of 
electrum  which  had  preceded  him ;  and  Darius,  the 
son  of  Hystaspes,  in  his  general  reform  of  the  Per- 
sian Empire,  followed  the  example  of  Croesus, 
adopting  alike  his  metals  and  his  standards  of 
weights. ' ' 

"  Darius  claimed  the  minting  of  gold  as  his 
exclusive  prerogative,  hence  throughout  ancient 
and  early  medieval  history  the  issue  of  gold  coin 
was  the  sign  of  a  claim  to  complete  autonomy. 
The  Persian  satraps  were,  however,  allowed  to 
issue  silver.  Also  the  Greek  cities  of  Asia  Minor 
were  allowed,  during  a  great  part  of  their  history, 
to  issue  electrum  and  silver  money  of  their  own. 
Meantime  everywhere  in  Greece  the  state  was  step- 
ping into  the  place  of  the  temple  as  the  issuer  of 
coin.  Hence  throughout  the  flourishing  period  of 
Greek  history  the  most  usual  inscription  on  the 
money  is  the  name  of  the  state  which  issued  it  or 
rather  the  people  of  that  state." 

"It  has  been  ably  maintained  by  Prof.  Curtius 
that  the  origin  of  coins  was  religious.  He  considers 
that  the  need  of  a  currency  became  most  clear  and 
strong  at  the  religious  festivals  which  took  place  at 
fixed  periods  in  connection  with  the  great  temples 
of  antiquity.  The  offerings  of  the  people  on  such 
occasions  would  take  the  form  of  small  bars  or 
ingots  of  gold  or  silver,  and  these,  on  being  accumu- 
lated in  the  temple  would  sometimes  be  stamped 
with  the  mark  of  the  deity,  — the  lyre  for  Apollo, 


48 

the  tortoise  for  Aphrodite,  the  owl  for  Athena. 
Thus  the  earliest  coins  are  everywhere  ingots  thus 
marked  with  the  symbols  and  not  the  heads  or  fig- 
ures of  deities.  In  fact  it  is  certain  that  in  early 
times  coins  were  closely  connected  with  the  deities 
and  their  festivals.  The  coins  of  Ephesus  are 
closely  connected  with  the  temple  of  Artemis; 
those  of  Miletus  with  the  temple  of  Apollo  at 
Didyma.  The  coins  of  Elis  bear  every  mark  of  a 
close  relation  to  the  Olympic  festival.  The  Roman 
mint  was  the  temple  of  Juno  Moneta. " 

"The  types  or  devices  of  early  Greek  coins  are 
almost  exclusively  religious.  The  earliest  money 
bore  a  mere  indentation  on  the  reverse,  and  on  the 
obverse  the  symbol  of  some  deity.  The  god  or 
goddess  selected  for  this  honor  was  often  the  pro- 
tecting divinity  of  the  mint  city.  The  symbol  was 
frequently  an  animal;  thus  the  wolf  of  Apollo  is 
impressed  on  the  early  coins  of  Argus,  the  owl  of 
P.i!!as  on  those  of  Athens,  Pegasus  on  those  of 
Corinth,  etc.  In  later  times,  that  is  to  say  early  in 
the  fifth  century,  this  symbol  is  in  most  coinages 
transferred  to  the  reverse  of  the  coin,  while  the 
obverse  is  reserved  for  the  effigy  of  the  deity  to 
whom  the  symbol  belongs.  This  is  the  most  general 
rule,  but  the  exceptions  are  very  numerous;  in 
fact,  in  every  district  of  Greece  the  coinage  has  a 
distinct  character.  No  city  which  was  autonomous 
seems  to  have  been  too  small  to  issue  coin,  with  its 
own  types  and  inscriptions,  and  each  city  struck 
on  the  standard  of  weight  which  best  suited  its 
markets  and  its  monetary  alliances.  Hence  the 
prodigious  abundance  of  Greek  coins  differing  in 


49 

type,  legend  and  weight  one  from  another,  which 
must  have  been  very  confusing  and  detrimental  to 
commerce  at  the  time." 

35.    RELIGIOUS   CONNECTION   OF   COINAGE. 

The  connection  of  coinage  with  religion,  and  of 
money  with  the  temples,  comes  out  with  special 
distinctness  in  Greek  history.  The  worship  of 
Apollo,  god  of  light  and  of  culture,  found  its  chief 
seat  in  Greece  at  Delphi,  on  an  isthmus  situated 
exactly  in  the  centre  of  commercial  intercourse  and 
in  the  meeting-point  of  all  the  routes  by  land  and 
by  sea.  The  annual  festival  was  intentionally 
placed  at  the  beginning  of  the  most  favorable  sea- 
son, in  order  that  a  visit  to  attend  it  might  be  made 
also  a  commercial  journey.  It  was  a  mart  of 
exchange,  at  which  industrious  men  of  business 
could  open  new  connections  and  carry  on  commer- 
cial relations  already  begun.  The  earliest  inns, 
halls  of  assembly,  trading  booths,  etc.,  were  in 
connection  with  the  temple  festivals.  The  art  of 
road-making,  and  of  building  bridges,  took  its  first 
origin  from  the  sanctuaries  to  which  people  wished 
to  make  annual  pilgrimages.  The  net-work  of 
Greek  roads  took  its  origin  from  Delphi. 

The  worship  of  Apollo  had  come  into  Greece  as 
a  mission,  and  one  of  its  supreme  principles  was 
that  of  missionary  spread  of  culture.  The  whole 
matter  of  colonization  stood  under  the  special  guid- 
ance of  Apollo,  who  was  regarded  as  the  god  of  the 
sea  and  the  coasts,  a  god  of  peace  and  prosperity. 
Not  only  were  the  holy  places  centres  of  protected 
and  peaceful  commercial  intercourse,  but  in  these 
4 


50 

trading  fairs  knowledge  of  articles  of  value  grew 
rapidly  and  methods  of  exchange  were  developed, 
Here,  therefore,  the  monetary  system  arose,  and 
finance  took  its  origin.  Dr.  Ernst  Curtius,  whose 
account  our  sketch  follows,  says  of  the  temples  as 
seats  of  wealth : 

"Long  before  colonization  had  begun  to  spread 
in  this  grand  and  connected  fashion,  the  holy  places 
of  the  land  were  centres  of  an  extensive  commercial 
intercourse,  which  found  peace  and  security  in  the 
sacred  ports,  on  the  sacred  roads,  and  in  the  vicinity 
of  the  temples,  whilst  in  the  rest  of  the  world  a 
wild  law  of  force  prevailed. 

"Herein  lies  perhaps  the  greatest  and  most  per- 
manent service  rendered  by  the  Delphic  oracle. 
The  exercise  of  this  influence,  however,  was  not 
confined  to  Delphi  alone.  Miletus  was,  like  Chal- 
cis,  an  Apolline  city.  The  temple  on  Delos  also, 
the  Heraeum  at  Samos,  and  the  Artemisium  at 
Ephesus,  became  the  starting-points  of  an  imposing 
maritime  commerce,  and  of  important  explorations. 
The  religious  sense  and  the  spirit  of  commerce, 
both  so  powerful  in  the  Hellenic  nation,  penetrated 
one  another  in  a  remarkable  degree.  The  gods 
were  the  wealthiest  capitalists  in  the  land,  and 
their  priests  the  first  to  understand  the  power  of 
capital.  The  temples  had  in  part  large  revenues 
from  the  proceeds  of  their  lands,  from  the  tithes  of 
war  booty  and  commercial  gains,  from  fines  and 
amercements,  from  the  gifts  presented  for  services 
rendered,  for  counsel  and  aid,  for  bodily  and  spirit- 
ual healing.  With  the  gold-producing  countries  of 
Asia,  Delphi  maintained  a  lively  intercourse;  at 


Delphi  were  established  by  Midas  and  Gyges  the 
first  treasures  of  gold  in  Hellas. 

"With  all  the  more  important  sanctuaries  there 
was  connected  a  comprehensive  financial  adminis- 
tration, it  being  the  duty  of  the  priests,  by  shrewd 
management,  by  sharing  in  profitable  undertakings, 
by  advantageous  leases,  by  lending  money,  to 
increase  the  annual  revenues  and  gather  a  treasure 
which  not  only  sufficed  for  the  maintenance  of  the 
dignity  of  religious  worship,  but  was  also  an  essen- 
tial means  of  advancing  the  national  power  of  the 
sanctuary.  The  treasure  of  the  gods  was  preserved 
under  the  threshold  of  the  house  of  the  god  or  in 
special  enclosures  within  the  court  of  the  temple 
under  the  oversight  of  the  treasurers.  There  were 
no  places  of  greater  security,  and  they  were,  there- 
fore, used  by  States  as  well  as  by  private  persons 
as  places  of  deposit  for  their  valuable  documents, 
such  as  wills,  compacts,  bonds,  or  ready  money. 
By  this  means  the  sanctuary  entered  into  business 
relations  with  all  parts  of  the  Greek  world,  which 
brought  it  gain  and  influence.  The  oracles  became 
money  institutions  which  took  the  place  of  public 
banks.  II.  46,  47. 

36.    ANCIENT   MONEY   WAS   METAL  BY   WEIGHT. 

The  fact  which  stands  out  most  distinctly  in  this 
history  is  the  use  of  precious  metals,  not  in  coins 
of  fiat  value,  but  in  bars,  rings,  ingots  or  other 
forms  invariably  current  by  weight.  Coinage 
essentially  meant  a  record  on  the  piece  of  metal  of 
its  weight.  The  history  of  honest  money  is  the 


52 

history  of  various  metals  esteemed  precious  and 
current  by  weight. 

Mr.  Jevons  in  his  "Money  and  the  Mechanism  of 
Exchange  ' '  *  says : 

''There  is  overwhelming  evidence  to  prove  that 
simple  currency  by  weight  is  the  primitive  system. 
Before  the  invention  of  the  balance,  lumps  and 
grains  were  no  doubt  exchanged  according  to  a 
rude  estimate  of  their  bulk  or  weight;  but  after- 
wards the  balance  became  a  necessary  instrument 
in  all  important  transactions.  In  the  Old  Testa- 
ment we  find  several  statements  clearly  implying 
that  the  ancient  Hebrews  used  to  pass  money  by 
weight.  Aristotle,  in  his  Politics,  gives  an  inter- 
esting account  of  his  view  of  the  origin  of  money, 
and  distinctly  tells  us  that  the  metals  were  first 
passed  simply  by  weight  or  size,  and  Pliny  makes 
a  similar  assertion.  That  it  was  so  we  may  infer 
from  the  remarkable  fact  that  even  when  no  use 
was  made  of  it  the  custom  of  bringing  a  pair  of 
scales  survived  as  a  legal  formality  in  the  sale  of 
slaves  at  Rome. ' ' 

"There  can  be  little  doubt  that  every  system  of 
coinage  was  originally  identical  with  a  system  of 
weights,  the  unit  of  value  being  the  unit  of  weight 
of  some  selected  metal.  In  the  present  day  cur- 
rency by  weight  is  far  more  extensively  practiced 
than  might  be  supposed.  In  all  large  international 
transactions  currency  by  weight  is  the  sole 
method." 


*  Pp.  88-91. 


53 


CHAPTER  IV. 

THE    PRECIOUS    METALS    AS    THE    MATERIAL 
OF  MONEY. 

37.    UNIQUE   POSITION   OF   MONEY   METALS. 

Mendeleeff,  the  greatest  of  living  chemists, 
points  out  the  double  character  of  "the  perfectly 
unique  position  held  by  copper,  silver  and  gold," 
—  their  chemical  position  and  their  monetary  posi- 
tion. Thus  he  says: 

"The  perfectly  unique  position  held  by  copper, 
silver,  and  gold,  in  the  periodic  system  of  the  ele- 
ments, and  the  degree  of  affinity  which  is  found 
between  them,  is  all  the  more  remarkable,  as  nature 
and  practice  have  long  isolated  these  metals  from 
all  others  by  having  employed  them  —  for  exam- 
ple, for  metallic  money  —  and  determined  their 
relative  importance  and  value  in  conformity  with 
the  order  of  their  atomic  weights,  etc.  —  silver 
between  copper  and  gold." 

The  metals  fall  by  their  chemical  characteristics 
into  series,  such  as  iron,  cobalt,  and  nickel  in  one, 
osmium,  iridium,  and  platinum  as  "the  heavy  plati- 
num metals,"  ruthenium,  rhodium,  and  palladium 
as  "the  light  platinum  metals,"  and  copper,  silver 
and  gold  as  the  series  of  precious  metals. 

The  double  series  of  platinum  metals  form  a 
group  of  six  metals,  which  are  associated  together 
in  nature  and  are  characterized  by  a  number  of 
common  properties,  both  physical  and  chemical. 
They  are  called  the  platinum  metals  because  plati- 


54 

tmtn  predominates  so  markedly  over  the  others. 
The  heavy  series  has  atomic  weights  nearly  191  to 
196;  the  lighter,  104  to  106.  They  are  found  in 
nature  in  a  native  state  —  not  as  iron,  which  is 
always  found  combined  with  some  other  element. 
They  have  great  infusibility  and  tenacity,  and 
small  chemical  energy  —  so  Mendeeleff  expresses 
it,  but  what  should  be  said  is  that  they  do  not 
readily  accept  union  with  other  substances,  but  are 
proof  against  the  attacking  energy  of  such  sub- 
stances ;  oxygen,  for  example,  the  attacking  energy 
of  which  is  very  intense.  The  predominance  of 
platinum  is  shown  by  the  fact  that  in  the  ores  as 
they  are  found,  70  to  80  per  cent,  is  platinum, 
5  to  8  iridium,  and  a  somewhat  smaller  quantity 
osmium;  while  the  light  series,  palladium,  rho- 
dium and  ruthenium  occur  in  still  smaller  pro- 
portions. 

38-    COSTLY   NOT   THE   SAME   AS   PRECIOUS. 

Mr.  Jevons  speaks,  though  as  barely  more  than 
a  "scientific  fancy,"  as  if  "some  still  more  valuable 
metal,  such  as  the  scarce  and  intractable  iridium  or 
osmium,  or  the  remarkable  metal  palladium,  might 
possibly  take  the  place  of  gold."  But  costly,  from 
scarcity  and  intractability,  does  not  mean  valuable 
by  the  side  of  either  gold,  silver,  or  copper.  Two 
things  are  to  be  considered  in  estimating  the  pre- 
ciousness  of  metals,  —  intrinsic  worth  and  cost. 
Intrinsic  worth  is  determined  by  rare  properties 
which  give  high  value.  Gold  stands  in  this  respect 
very  much  above  all  other  metals.  Cost  is  deter- 


55 

mined  by  the  amount  found  and  the  difficulty  of 
getting  the  metal  in  quantity.  Gold  is  easily  got 
and  is  found  in  very  great  quantity.  This  makes 
its  cost  low  in  comparison  with  quite  a  number  of 
substances  of  greatly  less  intrinsic  worth.  The 
obscure  metal  gallium,  belonging  to  the  same  group 
as  tin,  costs  $200  an  ounce,  while  gold  costs  but  $20 
per  ounce.  Palladium  and  thurium  are  very  much 
alike,  yet  they  cost,  the  first  $8  per  ounce  and  the 
second  $160.  Vanadium,  a  nearly  useless  black 
powder,  costs  $48  per  ounce.  Germanium  closely 
resembles  tin,  yet  it  costs  $95  per  ounce.  Rubid- 
ium, a  greenish-gray  powder,  costs  $88  per  ounce. 
Santatun,  which  is  very  like  rubidium,  costs  $80 
per  ounce.  Baryllium,  which  resembles  lead,  is 
also  worth  $80  per  ounce.  Calcium,  the  oxides  of 
which  are  so  common  and  so  familiar,  is  a  white 
powder,  worth  $80  per  ounce.  Indium  and  didym- 
ium  are  each  worth  $72  per  ounce ;  lithium,  $64, 
erbium  $62  per  ounce;  ruthenium  $44,  cerium, 
strontium,  rhodium,  and  zirconium,  each  $40  per 
ounce;  barium  $32,  borium  $25  per  ounce.  A 
principal  fact  affecting  the  cost  of  these  substances 
is  the  extreme  difficulty  of  preserving  them  from 
oxidation,  — •  that  is,  from  being  consumed  by  oxy- 
gen. It  is  very  difficult  to  get  them  separate  from 
the  oxygen  compounds  in  which  they  occur,  and 
very  difficult  to  keep  them  when  got  secure  against 
the  attack  of  oxygen.  They  are,  in  fact,  costly 
because  of  being  to  such  a  large  extent  intrinsically 
worthless,  in  consequence  of  the  fact  that  exposure 
to  oxygen  destroys  them,  as  iron  is  destroyed  by 
rust. 


56 

39-    PLATINUM   NOT   GOOD   FOR    MONEY. 

Platinum  is  more  costly  than  silver,  but  that  does 
not  make  it  valuable  for  use  as  money.  In  price 
per  ounce  platinum  takes  a  place  nearly  half  way 
from  silver  to  gold,  but  this'  is  due  to  the  demand 
for  it  in  the  arts  and  the  comparatively  small  sup- 
ply of  it.  Its  price  fluctuates  remarkably,  as  from 
$8  an  ounce  to  $4  an  ounce  during  the  ten  years, 
1875-1885;  showing  that  it  does  not  possess  quali- 
ties to  make  it  a  highly  precious  metal  if  there  were 
an  ample  supply  of  it  for  all  uses.  The  Encyclo- 
paedia Britannica  says  (Vol.  XIX.  190  and  193): 

"Though  a  noble  metal  chemically,  platinum  has 
too  modest  an  appearance  to  lend  itself  much  to 
the  jeweler's  purposes.  The  Russian  government 
used,  for  a  while,  to  strike  platinum  coins,  but  soon 
came  to  give  up  the  practice  on  account  of  the 
immense  fluctuations  in  the  commercial  value  of 
the  metal. 

"Almost  all  the  platinum  produced  nowadays  is 
made  into  chemical  utensils.  Platinum,  in  fact,  is 
the  metal  of  the  chemist.  'Without  platinum  cru- 
cibles, which  share  the  infusibility  of  porcelain 
with  the  chemical  inertness  of  gold  ones,  the  com- 
position of  most  minerals'  said  Liebig,  'could  not 
have  been  ascertained/  and  chemistry  generally 
could  not  have  come  up  to  its  present  level.  In 
industrial  chemistry  platinum  is  used  chiefly  for 
the  construction  of  those  stills  for  the  concentra- 
tion of  oil  of  vitriol,  which,  although  a  single  one 
costs  a  fortune,  are  cheaper  in  the  long  run  than 
glass  retorts. ' ' 


s; 

4O.    RELATIVE  POSITION   OF   SILVER  AND   GOLD. 

Silver  is  rarely  found  in  the  native  state  uncom- 
pounded  with  another  element  or  elements.  What 
we  call  silver  ores  are  all  more  or  less  complex 
mixtures,  in  which  less  than  half  is  silver.  It  is 
almost  universal  to  find  some  gold  in  silver  ores 
and  some  silver  in  gold  ores.  In  $350,000,000  worth 
of  metal  taken  from  the  Comstock  lode  of  Nevada, 
the  amount  of  gold  was  nearly  equal  in  value  to  the 
value  of  the  silver.  Gold  becomes  loose  from  the 
ores  in  which  it  occurs,  yet  remains  unaltered  by 
exposure  in  nature,  and  is  thus  found  in  particles 
and  nuggets.  Silver,  becoming  loose,  wears  away 
or  enters  into  a  new  mixture,  so  that  it  can  be  got 
only  from  the  rocks  in  which  it  originally  occurs. 
As  the  Encyclopaedia  Britannica  says  (Vol.  XXII. 
72),  "the  greater  rapidity  with  which  gold  can  be 
obtained  has  often  influenced  the  legal  relation  of 
value  between  these  two  metals,  and  its  bearing 
upon  prices,  commerce,  and  civilization." 

Silver  is  originally  as  widespread  as  gold,  but  the 
amount  of  loose  gold  enormously  extends  the  pres- 
ence of  gold,  and  its  readiness  to  the  hand  of  man, 
beyond  the  presence  and  readiness  for  use  of  silver. 
Most  of  the  ores  in  which  silver  occurs  are  difficult 
to  reduce,  or  separate  into  their  parts,  and  it  is 
therefore,  says  the  Britannica,  safe  to  regard  silver 
as  the  last  of  the  three  great  coining  metals  which 
come  into  use.  Pure  silver  has  a  beautiful  white 
color  and  luster.  It  is  almost  as  plastic  as  pure 
gold,  and,  like  it,  very  soft.  It  ranks  next  to  gold 
in  being  proof  against  the  action  of  caustic  alkali 


58 

lyes.  It  is  too  soft  to  make  durable  coins  without 
an  alloy  of  copper  to  harden  it. 

British  coin  silver  is  925,  and  may  be  not  more 
than  921  parts  in  1,000  of  pure  silver.  Only  900,  or 
within  three  of  900,  are  required  in  the  United 
States  and  in  Germany,  for  all  coins ;  also  in  France 
and  Austria  for  the  major  coins.  The  minor  coins 
of  France,  under  one  franc,  are  835  parts  silver,  93 
copper  and  72  zinc.  The  minor  coins  of  Austria 
do  not  have  more  than  520  parts  silver,  and  from 
that  down  to  375.  For  making  alkali-proof  vessels, 
an  alloy  found  superior  consists  of  910  parts  silver, 
70  gold,  and  20  nickel.  British  standard  silver  is 
too  soft  to  wear  well,  far  softer  than  the  900  alloy 
of  the  United  States,  Germany,  France,  and  Austria. 

The  color,  luster  and  power  of  resisting  oxida- 
tion, which  gold  possesses,  have  caused  it  to  be 
valued  from  the  earliest  ages.  It  is  the  only  metal 
of  a  yellow  color.  It  is  nearly  as  soft  as  lead ;  is 
the  most  malleable  of  all  metals ;  is  extremely  duc- 
tile, and  it  can  readily  be  welded  cold,  making  it  a 
very  simple  matter  to  compress  it  into  forms  of  any 
desired  kind.  It  is  found  in  nature  chiefly  as  pure 
metal,  and  less  frequently  in  combination  with  other 
metals,  as  silver,  lead,  and  tellurium.  For  coinage, 
alloys  with  silver  and  copper  are  chiefly  used. 

In  America  and  in  the  Latin  Union  countries  the 
alloy  in  use  has  900  in  1,000  parts  of  gold.  The 
Norse  2 -kroner  gold  piece  has  only  800  parts  gold. 
For  the  Austrian  reichsducaten  copper  is  used  with 
986.6  parts  gold.  English  standard  gold  is  com- 
posed of  eleven  parts  of  fine  gold,  and  one  part  of 
alloy,  chiefly  copper. 


59 

41.    THE  GOLD-SILVER  COMPOUND. 

The  Greeks,  as  the  Encyclopaedia  Britannica 
account  states  (Vol.  X.  740),  and  as  our  story  of 
early  money  has  already  shown,  were  familiar  with 
natural  alloys  of  silver  and  gold  known  under  the 
name  of  electrum,  and  rough  nuggets  of  which 
were  frequently  stamped  and  are  said  to  have 
formed  the  earliest  coins  of  the  Lydians  of  Asia 
Minor,  who  were  a  very  advanced  people  when  as 
yet  Greece  had  taken  only  the  first  steps  of  pro- 
gress. 

This  ancient  example  has  naturally  raised  the 
question  whether  we  could  not  accommodate  both 
gold  and  silver  interests  by  an  electrum  coinage, 
mixing  gold  and  silver  in  some  definite  proportion. 
It  is,  however,  a  suggestion  in  disregard  of  the  true 
science  of  money.  The  first  principle  of  that  sci- 
ence is  intrinsic  value  by  weight  of  the  material 
used  as  money ;  full  value  for  standard  money,  and 
less  than  full  for  subsidiary.  Be  the  shekels  of 
copper,  or  of  silver,  or  of  gold,  they  may  be  made 
good  money  in  proportion  as  they  have  intrinsic 
value,  readily  known. 

42.    EARLIEST  CURRENT   MONEY. 

Money  began  by  circulation  of  definite  weights 
of  one  of  the  precious  metals.  Coinage  was  merely 
marking  the  weight.  Our  modern  improved  coin- 
age is  only  an  improved  method  of  indicating  and 
making  permanently  secure  the  weight  of  the  coin. 
We  could,  with  equal  ease  and  advantage,  make 
money  of  copper,  silver,  platinum,  gold,  or  elec- 


6o 

trum,  if  they  all  alike  served  for  coinage,  on  the 
principle  just  stated.  As  a  matter  of  fact  they 
differ  very  greatly,  and  we  are  shut  up  for  good 
money  to  the  metal  or  metals  which  best  meet 
coinage  conditions. 

And  here  it  is  important  to  note  that  coinage,  or 
the  marking,  and  making  secure  the  value  by 
weight  of  a  piece  of  metal,  looks  in  two  directions 
—  that  of  minor  coins  of  low  value  and  limited  use, 
and  that  of  major  coins  of  high  value  and  unlimited 
use.  It  does  not  much  matter  about  minor  coins 
of  copper,  nickel,  or  silver  even,  because  they  only 
serve  to  count  small  values,  which  are  payable  in 
the  major  coins.  It  is  for  the  major  coins  that  we 
require  exact  and  secure  indication  of  the  value  by 
weight  of  every  coin. 

And  for  the  major  coins  the  fundamental  princi- 
ple is  this,  that  that  substance,  that  one  of  the 
precious  metals,  will  best  serve  for  money,  and 
must  for  that  reason  be  the  standard,  which  most 
constantly  and  steadily  keeps  the  highest  line,  or  at 
least  some  definite  high  line,  of  value.  As  the  out- 
put and  market  of  the  world  now  are,  gold  does 
this  far  beyond  silver. 

If  gold  mines  were  to  greatly  increase  in  number 
and  output,  and  silver  mines  to  correspondingly 
fail,  so  as  to  make  silver  to  be  steadily  held  at  the 
highest  line  of  value  above  gold,  the  effect  would 
be  to  give  silver  the  advantage  above  gold  for  pur- 
poses of  steadily  maintained  value  in  coin  form. 
If  we  could  depend  as  well  upon  the  value  in  trade 
of  a  definite  weight  of  silver  as  we  can  upon  that 
of  a  definite  weight  of  gold,  silver  would  be  just  as 


6i 

good  as  gold  for  money.  If  the  two  metals  would 
stand  together,  and  together  rise  or  fall  equally, 
and  if  possible  only  slightly  either  way,  then  we 
could  have  money  in  gold  or  silver  indifferently, 
so  far  as  relates  to  the  goodness  of  the  money  as 
coined  and  current  precious  metal,  the  one  great 
objection  in  such  case  to  silver  being  its  bulk  and 
weight  compared  with  gold.  An  immense  experi- 
ence, notably  in  France,  has  shown  that  bulk  and 
weight  alone  are  a  fatal  objection  to  silver  as  the 
chief  or  even  the  equal  money  of  modern  business. 
But  far  beyond  this  are  found  other  objections, 
especially  those  of  the  invariably  bad  working  of 
the  double  standard  system,  to  which  attention  is 
directed  in  later  chapters,  and  those  which  show 
silver  never  commanding  any  such  estimate  of  its 
desirability  and  worth  as  gold  always  and  every- 
where commands.  The  historical  facts  for  fully 
2,500  years  show  gold  alone  standing  at  a  high  line 
of  value  constantly  and  steadily,  and  silver  not  only 
making  no  approach  in  value  to  gold,  but  con- 
stantly fluctuating  in  value;  that  is,  in  what  it  can 
be  exchanged  for  in  trade.  We  cannot,  therefore, 
get  away  from  the  fact  that  gold  works  by  itself 
in  the  major  or  standard  coins  better  than  anything 
else,  far  better  than  silver,  and  that  the  more  silver 
there  is  coming  upon  the  market,  the  harder  it  will 
be  to  make  silver  work  equally  well. 

43     WHAT   MAKES   REAL   MONEY. 

The  fundamental  fact,  we  cannot  too  carefully 
consider,  which  makes  real  money,  is  its  intrinsic 
value,  the  value  of  the  substance  of  which  it  con- 


62 

sists,  such  as  a  given  weight  of  gold,  or  silver,  or 
copper,  or  platinum,  or  nickel.  But  it  is  not  indif- 
ferent what  substance  we  select  for  making  real 
money.  If  there  were  no  gold,  silver,  or  copper, 
real  money  could  be  readily  made  of  platinum, 
with,  perhaps,  an  approach  to  a  satisfactory  stan- 
dard; but  as  substances  are,  in  respect  of  the  cir- 
cumstances which  affect  their  value  for  making 
real  money,  gold  so  decidedly  stands  at  ^  the  top, 
out  of  reach  of  competition  by  or  comparison  with 
silver,  that  we  may  unhesitatingly  say  that  in  the 
nature  of  things  gold  enables  us  to  make  real  money 
of  the  most  satisfactory  standard. 

44.  THE    ULTIMATE  STANDARD. 

What  is  the  most  satisfactory  standard,  existing 
in  the  nature  of  things?  It  is  the  standard  of  stead- 
ily maintained  value;  not  an  absolute  maintenance 
of  value,  but  a  maintenance  the  nearest  to  absolute 
that  is  practicable,  and  decidedly  above  that  possi- 
ble in  the  case  of  silver.  While,  therefore,  we 
might  use  silver  to  make  real  money,  and  fare  well 
in  doing  so,  we  yet  can  fare  better  by  employing 
gold  for  our  standard  real  money,  making  our  sil- 
ver money  as  good  in  reality  as  we  can,  and  then 
raising  its  value  as  money  to  the  level  of  gold  by 
making  it  a  substitute  for  or  payable  in  gold. 

45.  WHAT  VALUE   CONSISTS   IN. 

If  we  ask  what  value  consists  in,  the  standard  of 
which  we  get  in  its  best  form  in  a  given  quantity 
of  gold,  the  answer,  determined  by  the  nature  of 
things,  is  the  estimate  made  in  trade.  Trade  or 


63 

barter  is  the  fundamental  fact  never  to  be  lost 
sight  of.  A  true  piece  of  money  is  a  given  amount 
of  whatever  substance  serves  well  or  serves  best  as 
money,  and  its  value  is  what  it  can  be  exchanged 
for  of  that  limited  class  of  commodities  which  are 
most  definitely  valued  in  ordinary  exchange.  The 
balance  measures  money  just  as  truly  as  it  meas- 
ures lead  or  wheat.  The  ideal  piece  of  money  is  a 
given  weight  of  gold  or  a  given  weight  of  silver 
readily  exchangeable  for  gold. 

We  cannot  take  the  value  of  gold  in  any  great 
variety  of  commodities  indiscriminately.  We  may 
take  it  in  wheat,  in  wool,  in  cloth  of  a  definite  qual- 
ity, the  production  of  which  is  very  general  and 
steady  and  the  uses  of  which  are  continuous  and 
universal,  but  even  so,  we  can  only  make  an 
approach  to  a  true  estimate  of  what  gold  is  worth 
to  mankind  at  different  times  and  in  different 
places.  If,  for  example,  we  compare  the  fifteenth 
century  with  the  nineteenth,  and  ask  how  much 
wheat,  or  wool,  or  cloth  an  ounce  of  gold  would  be 
exchangeable  for,  the  answer  which  we  get  is  sub- 
ject to  qualification  by  anything  affecting  the  com- 
parative  values  of  wheat,  wool  or  cloth  in  the  two 
centuries  About  all  that  we  can  arrive  at  is  the 
conclusion  that,  in  different  ages  and  places,  and 
with  a  sufficiently  large  development  of  normal 
conditions,  gold  fairly  maintains  not  only  a  high 
value  but  the  highest  value  among  large  exchange- 
able substances,  and  maintains  this  with  less  fluctu- 
ation than  any  other  substance  known  to  us.* 

*"  It  must   not  be   assumed   (hat  gold  is  absolutely  stable  in 
value.     When  we  speak  of  the  value  of  the  one  thing  which  meas- 


64 

The  money,  then,  which  we  make  of  gold,  or  the 
substitute  money  which  we  make  of  silver,  funda- 
mentally consists  of  one  thing,  and  one  only  —  a 
given  weight  of  the  standard  substance,  gold. 


CHAPTER  V. 

THE  MAKING  OF  MONEY. 

46.    METALLISM. 

The  study  of  money  requires  us  to  consider  the 
meaning  of  such  terms  as  metallism,  monometal- 
lism, and  bimetallism.  Metallism  properly  means, 
in  relation  to  the  question  of  rnone)^,  the  use  .of  a 
metal  or  metals  as  money.  It  might  mean  the  use 
of  any  metal  as  money.  As  a  matter  of  fact,  with 
the  experience  of  mankind  establishing  usages 
which  are  for  the  best,  metallism  comes  to  mean 
the  use  of  any  precious  or  convenient  metal 
in  the  making  of  money.  Gold  and  silver  are 
found  useful  precious  metals  from  which  to  make 
money.  Copper  is  found  a  convenient  cheap  metal 
from  which  to  make  money  in  coins  of  small 
value. 


ures  all  value,  we  mean  its  purchasing  power  in  terms  of  those 
commodities  whose  supply  is  unlimited,  or  not  controlled  by 
monopoly.  The  value  of  gold  thus  measured  is  subject  to  varia- 
tions, but  it  is  impossible  to  measure  them  with  accuracy  even 
when  we  compare  prices  during  long  intervals  of  time.  Gold  is 
subject  to  fewer  changes  of  purchasing  power  than  any  other 
known  substance.  The  fact  that  it  is  not  wholly  free  from  varia- 
tions itself  will  not  prevent  it  from  becoming  the  sole  and  universal 
[standard]  money  of  civilized  mankind."  Horace  White  in 
4 '  Money  and  Banking. ' ' 


65 

47-    FULL  VALUE  COIN. 

There  are  two  principles  on  which  we  can  pro- 
ceed in  making  pieces  of  metal  serve  as  money.  In 
regard,  for  instance,  to  cheap  metal  made  into  small 
coins  and  used  as  money,  the  law  might  require 
that  whenever  the  mints  coined  copper  they  should 
estimate  the  actual  value  of  a  certain  weight  of 
copper  from  the  average  of  prices  for  the  previous 
twelvemonth,  and  should  give  in  a  one-cent  coin 
one  cent's  worth  of  copper.  If  this  were  done,  a 
man  might  gather  a  large  quantity  of  copper  coins 
with  a  certain  measure  of  security  that  he  could 
sell  them  for  their  face  value  for  copper,  and  yet 
there  would  be  a  measure  only  of  security.  If  the 
amount  of  copper  coined  was  so  large  and  its  use 
so  common  that  a  man's  bank  account  would  stand 
to  a  considerable  extent  in  a  great  weight  of  cop- 
per, with  no  chance  to  get  rid  of  it  except  to  sell  it 
for  its  worth  as  metal,  there  would  be  many  chances 
that  such  sale  would  be  attended  with  some  loss. 
As  a  matter  of  fact,  there  is  no  trouble  with  small 
cheap  coins,  because  the  principle  of  putting  exact 
value  of  the  metal  into  them  is  not  only  not  fol- 
lowed, but  is  avoided.  If  it  were  attempted  to  be 
as  exact  as  circumstances  permit,  it  would  be  pos- 
sible for  traders  to  gather  large  quantities  of  the 
copper  coins  whenever  they  found  the  price  of 
copper  higher  than  that  which  was  assumed  in  the 
making  of  the  coins,  and  by  selling  the  coins  as 
metal  they  would  make  a  profit.  For  this  reason 
the  wise  principal  of  coinage  of  cheap  coins  is  that 
of  making  them  of  sufficiently  less  actual  value  in 
5 


66 

comparison  with  the  face  value  to  remove  all  tempta- 
tion to  accumulate  them  for  sale  as  metal. 

48.    FIAT   VALUE   COIN. 

The  second  principle  on  which  we  can  proceed 
in  making  pieces  of  metal  serve  as  money  is  that 
of  making  them  in  whatever  form  is  most  conven- 
ient, and  authorizing  them  to  count  as  of  a  certain, 
value  for  use  as  money.  The  law  might  say,  for 
example,  that  a  piece  of  copper  worth  ten  cents  as 
metal  should  pass  as  worth  a  dollar.  This  would 
mean  that  if  we  had  a  dollar  to  pay  in  taxes  or  a 
dollar  to  pay  in  wages  for  labor,  or  a  dollar  to  pay 
in  settling  any  debt,  we  could  pay  it  with  one  of 
these  coins  intrinsically  worth  only  ten  cents. 
There  is  but  one  difficulty  with  money  of  this  kind. 
If  it  exists  only  under  the  law  in  question  it  will 
not  pass  in  the  way  proposed.  People  will  uni- 
versally insist  that  it  is  actually  worth  only  ten 
cents,  and  all  transactions  will  be  made  on  the 
basis  of  its  being  worth  only  ten  cents.  There  is 
nobody  who  will  give  more  than  ten  cents  for  it, 
and,  consequently,  it  cannot  pass  for  more  than 
that.  Even  if  the  government  takes  it  for  that  it 
can  get  along  only  by  requiring  that  a  tax  or  a 
duty  which  ought  to  be  one  dollar  shall  be  ten  dol- 
lars. In  the  same  way  a  laborer  who  ought  to 
receive  two  dollars  a  day  will  require  twenty  in 
order  to  be  fairly  paid.  If  he  gets  only  five  or  ten 
or  fifteen,  he  will  be  cheated  out  of  fifteen,  ten  or 
five.  In  all  probablity  with  such  money  it  would 
be  practicable  to  steadily  cheat  the  laborer,  because 
of  his  difficulty  in  insisting  on  so  high  a  figure  as 


67 

twenty  dollars  for  a  day's  work;  and,  on  the  other 
hand,  when  he  comes  to  pay  for  articles  of  food  or 
clothing  it  will  be  again  easy  to  make  him  pay  more 
in  proportion  than  he  can  get  on  the  plea  of  the 
small  value  of  the  dollars  which  he  pays.  This 
kind  of  money  made  by  law  is  called  fiat  money, 
and  it  has  been  called  thieves'  money,  because  just 
in  proportion  as  it  can  be  handled  successfully 
those  who  handle  it  steal  from  those  with  whom 
they  deal.  They  give  a  ten-cent  dollar  and  take 
something  worth  nearer  a  true  dollar.  It  is  one  of 
the  worst  and  most  cruel  forms  of  dishonesty.  It 
can  be  practiced,  of  course,  on  a  different  basis 
from  that  of  ten-cent  dollars.  It  might  be  said,  for 
example,  by  our  coinage  laws,  that  ten  cents'  worth 
of  copper  should  constitute  a  shilling,  and  that  five 
shillings  should  constitute  a  dollar.  Many  people 
would  not  understand  the  trick  in  this,  but  would 
try  to  make  it  work,  and  would  be  cheated  accord- 
ingly. 

49.    A  NECESSITY   IN   CHEAP   COINS. 

There  is  one  case,  that  of  cheap  coins,  in  which 
it  is  important  to  have  the  coin  actually  worth  a 
little  less  than  its  face.  It  is  the  case  of  the  cheap 
copper  coins  already  referred  to.  If  it  were 
attempted  to  put  full  standard  value  into  them  a  rise 
in  the  price  of  the  metal  above  that  standard  value 
would  tempt  traders  to  get  the  coins  in  great  quan- 
tity and  sell  them  for  metal  instead  of  passing  them 
for  money. 

Coinage  laws  recognize  in  the  case  of  small  coins 
that  are  not  worth  in  metal  their  face  value,  that 


68 

no  one  ought  to  be  required  to  take  them  as  money 
beyond  a  certain  narrowly  limited  amount.  They 
are  made  legal  tender,  that  is,  for  only  five  dollars, 
or  a  similar  small  sum.  One  consideration  requir- 
ing this  is  that  of  the  objection  to  the  bulk  which 
would  have  to  be  handled  in  using  such  cheap  coins 
as  money  for  any  considerable  sum.  A  man  might 
be  tendered,  in  payment  of  a  sale  or  a  debt,  a  weight 
of  copper  which  he  could  not  carry  away;  but  even 
if  this  did  not  make  such  coins  objectionable  for 
use  as  money  to  any  extent,  they  would  be  objec- 
tionable solely  on  the  ground  of  the  difference 
between  their  real  value  in  metal  and  their  face 
value  as  coin. 

5O.   FULL   VALUE    METALLISM. 

If  we  now  look  higher  up  among  the  metals  to  pla- 
tinum and  silver  and  gold  we  find  the  same  princi- 
ples of  money  metallism  applicable.  The  corner- 
stone of  honest  coinage  is  to  stamp  a  piece  of  metal 
for  what  it  is  worth.  But  by  "  worth "  may  be  meant 
the  piece  in  itself,  or  what  it  can  be  exchanged  for. 
We  might  stamp  pieces  of  gold,  silver,  and  plati- 
num according  to  their  weight  in  pounds,  ounces, 
or  grains.  Our  money  might  consist  of  gold  coins 
weighing  various  numbers  of  ounces  and  of  silver 
coins  also  weighing  various  numbers  of  ounces, 
and  of  platinum  coins  also  weighing  various  num- 
bers of  ounces;  and  in  all  transactions  of  trade 
money  would  go  by  its  weight,  so  many  ounces  of 
gold,  or  so  many  ounces  of  silver,  or  so  many 
ounces  of  platinum.  Platinum,  it  may  be  said  here, 
is  not  much  thought  of  for  use  as  money,  yet  Rus- 


69 

sia  had  it  in  use  at  one  time,  and  it  might  be  used 
but  for  the  extent  to  which  there  are  objections  to 
employing  it  as  money.  It  is  useful  in  discussing 
the  subject  to  keep  platinum  in  view,  because  it  is 
a  really  precious  metal,  and  can  be  very  well  used 
as  money,  and  also  because  a  view  of  the  objections 
to  platinum  as  money  will  help  us  to  understand 
some  other  points  of  the  question  of  money. 

51.    METHOD   OF   KNOWING  COIN   VALUES. 

If  we  were,  as  suggested,  to  have  for  money 
pieces  of  gold,  of  silver,  and  of  platinum,  passing 
according  to  their  weight,  it  would  necessitate  con- 
stant knowledge  of  the  relative  values  of  the  three 
metals,  and  that  knowledge  would  be  determined 
by  the  prices  at  which  the  metals  sold  in  the 
accepted  metal  markets.  We  would  have  telegrams 
from  all  the  great  money  centers  giving  daily  infor- 
mation as  to  the  amount  of  silver  necessary  to  bal- 
ance an  ounce  of  gold,  and  the  amount  of  platinum 
necessary  to  balance  either  an  ounce  of  silver  or  an 
ounce  of  gold.  Transactions  would  be  figured  on 
the  basis  of  the  daily  relative  values  of  the  metals. 
All  settlements  would  have  to  be  on  the  basis  of 
counting  the  different  weights  offered  of  the  three 
metals  according  to  the  estimate  based  upon  their 
relative  value  at  the  moment  of  settlement.  If,  for 
instance,  a  trade  had  been  made  thirty  days  since 
on  the  basis  of  paying  in  a  certain  weight  of  plati- 
num, or  its  equivalent,  the  equivalent  would  have 
to  be  taken  in  either  silver  or  gold,  according  to 
the  market  rate  on  the  day  of  payment.  It  might 
have  seemed  when  the  promise  of  payment  in  plati- 


num  was  made  that  platinum  was  likely  to  be  at 
the  end  of  thirty  days  lower  than  the  average  in 
price,  and  that  the  equivalent  for  it  in  gold  or  sil- 
ver would  be,  say  in  sixty  days,  a  considerable 
advance  upon  the  platinum  value;  and  so  with 
reference  to  either  of  the  other  metals.  Every 
transaction  would  necessarily  call  for  either  so 
many  ounces  of  gold,  or  so  many  ounces  of  silver, 
or  so  many  ounces  of  platinum,  or  their  equivalent, 
on  the  day  of  payment.  A  transaction  might, 
indeed,  adopt  the  relative  value  on  the  day  of  sale 
of  the  three  metals  as  the  value  to  be  followed  on 
the  day  of  payment,  and  the  promise  to  pay  might 
refer  definitely  to  given  weights  of  either  one  of 
the  three  metals.  But  whatever  the  exact  character 
of  particular  transactions,  the  principle  underlying 
them  all  would  be  that  of  observing  from  day  to 
day  the  relative  values  of  the  three  metals  in  use 
as  money  by  means  of  pieces  of  definite  weight. 
The  market  would  steadily  and  constantly  deter- 
mine just  what  weight  of  silver  stood  for  that  day 
as  equal  to  an  ounce  of  gold,  and  just  what  weight 
of  platinum  stood  for  that  day  as  equal  to  an  ounce 
of  gold,  or  the  equivalent  to  an  ounce  of  gold  in 
silver. 

52.    HISTORIC   BASIS   OF   REAL   MONEY. 

All  human  experience  from  the  beginning  during 
not  less  than  six  thousand  years,  has  shown  that 
the  foundation  of  money  is  either  metallism  on 'the 
basis  of  the  intrinsic  value  of  the  metal,  or  some- 
thing similar  to  metallism  of  that  kind,  with  a  ten- 
dency to  come  to  metallism  pure  and  simple.  The 


real  principle  is  that  of  trade  or  barter.  At  first 
anything  may  be  traded  for  anything,  but  conveni- 
ence soon  fixes  on  something  particularly  precious 
to  serve  as  a  type  of  value.  A  civilization  which  is 
a  little  agricultural,  but  mostly  pastoral,  and  with 
very  large  development  of  the  raising  of  cattle, 
might  find  it  convenient  to  make  cattle  the  type  of 
value,  so  that,  for  example,  a  transaction  for  the 
purchase  of  certain  rights  of  pasture  should  be 
made  in  terms  of  so  many  cattle.  This  would 
probably  mean  so  many  cattle  with  two  or  three 
classes  of  cattle  compared  relatively.  A  payment 
might  mean,  for  example,  ten  oxen,  or  thirteen 
cows,  or  twenty  yearlings,  or  a  part  of  each,  with 
this  scale  of  relative  value.  History,  however, 
shows  an  invariable  tendency  to  metallism  as  the 
true  method  of  money. 

53.   SILVER  METALISM. 

To  a  very  large  extent,  if  not  universally,  there 
has  been  quite  as  much  readiness  to  accept  silver 
metallism  as  gold  metallism.  During  many  ages  of 
knowledge  of  the  precious  metals,  silver  seemed 
•quite  as  good  a  type  of  metallism  as  gold,  in  spite 
of  the  fact  that  a  given  weight  of  gold  was  esti- 
mated to  be  worth,  perhaps,  twelve  or  thirteen 
times  as  much  as  the  same  weight  of  silver.  There 
were  some  quite  special  reasons  during  the  earlier 
ages  of  human  experience  for  appreciating  very 
highly  the  qualities  of  silver,  and  for  placing  it  by 
the  side  of  gold,  in  spite  of  the  more  than  ten-fold 
intrinsic  value  of  the  gold.  So  long  as  this  state 
of  things  existed,  nothing  objectionable  resulted 


72 

from  recognizing  it,  and  acting  accordingly.  One 
of  the  first  principles  of  money  is  that  of  being 
guided  by  whatever  universal  estimate  exists.  If, 
for  instance,  it  were  possible  for  copper  to  become 
so  rare  as  to  be  precious  because  of  rarity,  and  for 
some  new  electrical  treatment  of  copper  to  give  it 
even  greater  interest  than  gold,  the  relative  value 
of  copper  might  rise  above  even  that  of  gold,  and 
it  would  then  be  not  only  legitimate  but  necessary 
to  recognize  that  relative  value  and  to  act  upon  it. 

54.    GOLD   METALLISM. 

Another  thing  which  history  shows  is  the  invari- 
able tendency  of  trade,  of  market  opinion,  and  of 
the  common  sense  of  mankind  everywhere  to  con- 
sider the  most  precious  of  the  metals  as  the  type  of 
metallism.  If,  for  example,  there  becomes  estab- 
lished the  use  for  money  of  stamped  weights  of 
gold,  silver,  and  platinum,  convenience  at  once 
demands  that  one  of  them  stand  as  the  type.  But 
this  type  cannot  be  arbitrarily  chosen.  The  con- 
venience in  question  turns  entirely  upon  which  of 
the  metals  is,  by  its  intrinsic  value  and  by  its  steadi- 
ness in  relative  value,  superior  to  the  others. 
There  has  never  been  a  doubt  as  to  the  immense 
superiority  of  gold  in  intrinsic  value  as  compared 
with  silver.  The  earliest  coinage  of  which  we 
have  any  knowledge  made  gold  worth  twelve  or 
thirteen  times  as  much  as  silver,  weight  for  weight. 
But  this  alone,  decisively  as  it  determines  the  type 
of  intrinsic  value,  might  not  of  necessity  determine 
the  type  of  money  metallism.  If  it  were  the  fact 
that  silver  at  thirteen  to  one,  or  sixteen  to  one,  or 


73 

twenty  to  one,  or  at  whatever  ratio,  held  a  steady 
relative  value,  fluctuating  less  in  relative  value 
than  gold,  that  would  give  it  for  money  purposes 
the  superiority  as  a  type  of  metallism  But  all 
experience  testifies  to  the  exact  opposite  of  this. 
It  is  gold,  with  its  greatly  superior  intrinsic  value, 
which  is  greatly  superior  also  in  the  steadiness 
with  which  it  maintains  its  relative  value.  The 
convenience,  therefore,  of  counting  in  gold  value 
and  calculating  from  gold  values  is  greater  than 
any  other.  It  is  not,  indeed,  perfect;  that  is  to 
say,  if  we  take  a  variety  of  important  values,  val- 
ues of  various  food  products,  and  of  other  articles 
of  universal  trade  from  year  to  year,  and  from 
generation  to  generation,  and  take  their  value  rela- 
tively to  the  value  of  gold,  or  what  is  the  same 
thing,  the  value  of  gold  relatively  to  their  value, 
we  may  readily  enough  perceive  that  there  is  some 
fluctuation  in  the  relative  value  of  gold.  This, 
however,  does  not  alter  the  fact  that  in  gold  we 
have  the  type  which  is  far  nearer  the  perfect  than 
any  other  which  we  can  have.  Platinum  is  out  of 
sight  below  it  because  of  the  very  great  variations 
in  its  market  value,  making  it  extremely  objection- 
able for  employment  as  money,  or,  in  other  words, 
as  a  precious  metal  of  steady  value.  Silver  stands 
between  platinum  and  gold.  As  a  precious  metal 
of  steady  value  it  ranks  not  only  below  gold  but  far 
below  it.  It  cannot  be  made  a  type,  and  to  that 
extent  a  standard  of  value  anything  like  as  con- 
veniently as  gold  can,  simply  because  its  variations 
in  market  value  are  very  much  beyond  those  of 
gold. 


74 

55-    GOLD   THE   STANDARD. 

Inevitably,  therefore,  the  money  metallist  in  all 
trade  everywhere  throughout  the  world  must  take 
his  point  of  judgment  for  values  from  gold  instead 
of  from  silver.  Even  if  we  use  three  precious 
metals,  gold,  silver,  and  platinum,  as  money,  and 
cheaper  metals  as  nickel  and  copper  for  coins  of 
small  value  and  of  limited  use  as  legal  tender,  the 
whole  system,  in  order  to  be  the  most  convenient, 
the  best  in  working,  and  the  safest  and  most  satis- 
factory, must  have  its  basis  in  gold,  so  that  all 
transactions  can  be  conducted  by  calculating  the 
values  of  everything  in  gold.  This  requires  that 
whatever  coinage  of  silver  is  attempted,  or  what- 
ever coinage  of  platinum  is  attempted,  the  princi- 
ple shall  be  followed  of  harmonizing  the  use  of 
these  coins  with  the  use  of  gold  as  a  standard  of 
value. 

56.    SPECIAL   CASE   OF  SILVER. 

The  application  of  this  principle  is  especially 
important  in  the  case  of  silver,  because  silver, 
although  considerably  less  desirable  than  gold  for 
use  as  a  standard  or  basis,  is  yet  capable  of  such 
use.  If  silver  is  coined  at  as  nearly  as  possible  its 
intrinsic  value  at  the  time  of  coinage,  that  is,  its 
value  relatively  to  gold,  there  might  happen  later 
a  rise  in  the  price  of  silver  which  would  make  it  of 
intrinsic  value  greater  than  its  face  value.  The 
result  of  this  would  be  that  traders  in  money  would 
accumulate  the  silver  in  exchange  for  gold,  and  sell 
it  for  its  value  as  metal,  for  the  sake  of  the  profit 
•which  they  would  make  on  the  difference  between 


75 

the  coined  value  and  the  intrinsic  value.  It  is, 
therefore,  to  the  interest  of  steadiness  in  the  use 
of  silver  money  that  its  intrinsic  value  should  be 
kept  somewhat  lower  than  its  face  value.  On  the 
other  hand,  the  same  interest  requires  that  there 
should  not  be  too  much  difference  between  the  face 
value  and  the  intrinsic  value.  If  the  difference  is 
large,  thirty  or  forty  cents  on  the  dollar  for 
instance,  then  the  silver  coin  is  in  reality  a  promise 
to  pay,  secured  by  the  sixty  cents'  worth  of  silver, 
and  requiring  further  security  for  the  other  forty 
cents.  This  further  security  has  to  be  provided 
for,  and  provision  of  such  security,  on  a  very  large 
scale,  through  a  very  large  use  of  silver  as  money, 
can  be  secured  only  in  one  way,  by  the  accumula- 
tion by  government  of  a  corresponding  gold  reserve, 
or  at  least  such  a  large  reserve  as  will  show  that 
the  government  is  in  a  position  to  promptly  meet 
both  this  and  any  other  possible  demands  upon  it 
for  what  may  be  called  full  value  payment. 

57.    GOLD   COMMANDS   CONFIDENCE. 

One  remarkable  illustration  of  the  opinion  of  the 
world  in  regard  to  money  is  the  fact  that  the  great 
nations  of  Europe,  whose  circumstances  compel 
them  to  contemplate  the  possibility  of  having  in 
hand  a  great  amount  of  money  for  war  purposes, 
are  doing  all  that  they  can  to  lay  up  a  great  store 
of  gold.  The)r  know  that  gold  is  a  precious  metal 
of  steady  value,  and  that  whatever  theories  may  be 
in  vogue,  or  whatever  practice  nations  may  adopt, 
the  universal  market  will  recognize  their  gold 
according  to  its  intrinsic  value  as  standard  money 


76 

which  can  be  depended  upon.  If  they  were  to 
accumulate  in  the  same  way  an  immense  stock  of 
silver,  they  would  take  the  chance  of  finding  the 
silver  greatly  depreciate  on  their  hands.  They 
might  have  $500,000,000  in  silver,  that  is  $500,- 
000,000  worth  that  in  gold  at  the  time  the  silver 
was  purchased,  and  by  the  time  they  got  ready  to 
use  it  it  might  have  fallen  forty  or  fifty  per  cent. 
in  value.  In  1873  silver  was  worth  a  little  more 
than  1 6  to  i,  and  a  United  States  silver  dollar  was 
worth  a  little  more  than  a  gold  dollar.  For  eighty 
years  silver  had  been  worth  as  much  or  more  than 
1 6  to  i  of  gold,  but  in  1894  it  was  worth  less  than 
half  that.  The  silver  in  one  of  our  present  silver 
dollars  is  worth  about  fifty  cents.  A  visitor  to 
Mexico  has  recently  given  this  illustration :  In 
paying  at  a  restaurant  for  a  dinner,  the  charge  for 
which  was  one  dollar  in  Mexican  money,  he  handed 
out  an  American  silver  dollar,  and  got  in  change  a 
Mexican  dollar  containing  seven  and  one-half  grains 
of  silver  more  than  the  American,  and  therefore 
intrinsically  worth  more  than  the  American.  The 
secret  of  the  exchange  was  that  the  American  silver 
dollar  was  construed  as  a  United  States  promise  to 
pay  one  dollar  in  gold,  and  it  therefore  passed  for 
more  than  twice  its  intrinsic  value. 

58.    THE   CHIEF   PROBLEM   OF   METALLISM. 

By  far  the  most  important  problem  of  metallism 
is  that  of  two  kinds  of  money,  one  standard,  and 
the  other  subsidiary ;  the  standard  money  to  be  in 
the  standard  precious  metal,  gold,  and  the  subsidi- 
ary money  to  be  in  the  subsidiary  precious  metal  Y 


77 

silver.  If  this  relation  of  the  two  metals  and  of  the 
two  kinds  of  money  is  not  accepted,  it  means  a  fight 
between  silver  and  gold,  with  the  absolute  certainty 
of  victory  for  gold  and  defeat  for  silver,  carrying 
injury  wherever  dependence  has  been  placed  upon 
silver,  and  prosperity  wherever  the  basis  trusted 
has  been  gold.  This  is  a  result  of  the  nature  of 
things.  We  might  like  to  have  it  different,  and  we 
may  be  able  to  show  by  argument,  that  it  could  be 
different,  and  ought  to  be;  but  the  fact  is  it  will 
not  be  as  long  as  the  arrangements  of  mankind  are 
what  they  are.  A  single  nation,  having  no  rela- 
tions whatever  outside  itself,  could  adopt  a  system 
irrespective  of  the  rest  of  mankind,  but  nothing  of 
the  sort  is  possible  in  matters  of  finance.  Even  so 
immensely  strong  a  nation  as  the  United  States  is 
to  a  large  extent  necessitated  to  do  what  the  world 
at  large  considers  best.  The  world  at  large  con- 
siders best  the  use  of  the  precious  metals  for  money 
on  the  general  basis  of  security  by  intrinsic  value 
for  nominal  value ;  and  it  further  considers  that 
security,  in  intrinsic  value,  is  much  steadier,  more 
certain,  and  more  satisfactory,  to  be  in  gold  value 
rather  than  in  silver  value.  Silver,  therefore,  is 
placed  by  mankind  in  a  subsidiary  position,  and 
the  interests  of  silver  require  that  the  best  be  made 
of  that  position. 

59.    THE   TRUE   INTEREST   OF   SILVER. 

What  is  best  for  silver  turns  entirely  upon  the 
relative  intrinsic  value  of  silver.  The  maintenance 
of  the  subsidiary  position  requires  two  things,  first, 
a  sufficient  intrinsic  value  in  the  subsidiary  coin  to 


78 

maintain  an  average  near  approach  to  face  value, 
and,  second,  a  sufficient  face  value  above  the  intrin- 
sic value  to  give  security  against  the  latter  being 
carried  by  changes  in  the  market  price  above  the 
former.  A  silver  dollar,  that  is,  should  employ  as 
much  silver  as  is  not  likely  to  become  worth  more 
than  its  face  value.  The  bulk  of  silver  coinage  will 
thus  stand  appreciably  near  in  value  to  the  value 
for  which  it  passes,  yet  without  rising  above  its 
face  value,  with  the  effect  of  displacing,  for  the 
time,  the  gold  standard. 

It  is  misleading  to  speak  of  the  two  moneys, 
gold  and  silver,  as  "equal  standards  of  value." 
We  may  say  "two  moneys,  gold  and  silver,  side  by 
side,"  but  to  make  them  work  together  for  the  best 
advantage,  both  of  the  public  interest  and  of  the 
silver  interest,  it  is  absolutely  necessary  to  make 
the  gold  the  standard  of  value,  and  to  place  the 
silver,  in  the  matter  of  the  amount  of  intrinsic 
value  in  silver  coins,  in  a  subsidiary  position.  To 
attempt  to  give  both  metals  standard  or  first  place 
is  to  have  no  secure  standard,  and  no  steady  place 
for  either.  Silver  will  stand  best  both  as  coin 
largely  employed  and  as  metal  in  the  markets  of 
the  world,  if  we  keep  it  in  the  best  possible  subsid- 
iary place,  and  do  not  allow  it  to  rise  by  the  changes 
of  the  market  to  a  standard  place. 

The  question  of  coinage  of  silver,  the  question, 
that  is,  of  the  amount  of  intrinsic  value  relatively 
to  the  nominal  value  to  be  put  into  silver  coin, 
ought  to  be  left  to  the  coinage  experts.  It  is  a 
matter  for  the  mint,  not  a  matter  for  legislation. 
Legislation  should  determine  the  principle  on  which 


79 

the  mint  shall  turn  out  silver  coins  as  near  full- 
value  as  will  not  violate  the  subsidiary  basis,  but 
no  more  than  that.  The  mint  experts  will  readily 
determine,  from  experience  in  matters  of  coinage, 
just  where  the  line  should  be  drawn  in  silver  coins 
between  face  value  and  intrinsic  value. 

60.    GOLD   BIMETALLISM. 

If  these  principles  are  carried  out  we  obtain  a 
system  of  gold  bimetallism,  that  is,  money  metal- 
lism  based  upon  both  gold  and  silver,  but  with  gold 
as  the  standard  money  and  silver  as  the  subsidiary 
money.  Any  other  system  for  coinage  of  silver, 
regardless  of  the  preservation  of  the  gold  standard, 
can  only  have  the  effect  of  depriving  ourselves  of 
the  use  of  either  gold  or  silver.  If  we  coin  silver 
with  a  value  of  metal  in  each  coin  above  the  face 
value,  even  if  only  a  little  above  it,  it  means  that 
we  offer  to  all  comers  more  than  a  dollar's  worth 
of  silver  for  a  dollar  in  gold.  Everybody  that 
knows  enough  to  trade  in  money  will  hand  in  the 
gold  and  take  our  silver,  and  we  shall  find  our- 
selves entirely  sold  out  of  the  silver  and  on  a  basis 
of  gold  monometallism.  On  the  other  hand,  if  we 
make  silver  coins  which  are  less  in  intrinsic  value 
than  their  face  value,  even  if  only  a  little  less,  and 
make  them  full  legal  tender  for  their  face  value, 
we  at  once  set  in  motion  an  effort  of  all  who  have 
our  silver  to  exchange  it  for  our  gold,  because  by 
the  exchange  they  will  make  something ;  and  the 
result  of  this  will  be  to  get  all  our  gold  and  leave 
us  with  only  silver.  This  will  be  silver  monometal- 
lism at  a  cost  represented  by  the  difference  between 


8o 

the  value  of  our  stock  of  gold  and  the  silver  which 
we  have  taken  in  place  of  it.  If,  for  example,  we 
coin  silver  at  16  to  i,  and  make  such  coinage  of 
silver  dollars  full  legal  tender,  there  will  be  a  very 
rapid  taking  away  of  our  gold  in  exchange  for  sil- 
ver with  a  loss  on  every  dollar,  at  the  present  price 
of  silver,  of  nearly  or  quite  half  a  dollar.  Even  if 
circumstances  should  considerably  carry  up  the 
price  of  silver  we  would  still  be  in  the  same  fix, 
that  of  losing  our  gold  and  getting  in  place  of  it 
silver  of  less  value.  If  it  were  possible  to  make 
our  silver  coins  of  almost  exactly  the  same  face 
value  as  their  intrinsic  value,  we  would  still  have 
one  or  the  other  of  the  difficulties  mentioned.  Sil- 
ver fluctuates  in  value  much  more  than  gold  does, 
and  for  most  of  the  time  the  intrinsic  value  would 
be  either  above  or  below  the  face  value,  and  we 
should  have  one  or  the  other  of  the  difficulties  of 
which  we  have  spoken.  We  should,  in  short,  have 
silver  monometallism  or  gold  monometallism,  as  to 
money  in  circulation,  just  according  as  the  one 
dollar  or  the  other,  silver  or  gold,  stood  relatively 
lowest  in  market  value.  The  lowest  always  remains 
as  money,  while  the  highest  is  disposed  of  as  mer- 
chandise. Issue  of  the  lower  as  legal  tender  equal 
with  the  higher  is  the  same  thing  exactly  as  sale  of 
the  higher  at  a  profit  to  the  money  mongers  equal 
to  the  difference  in  value  of  the  two.  If  the  United 
States,  for  example,  with  its  present  stock  of  six 
hundred  millions  in  gold,  should  issue,  and  make 
standard  and  legal  tender,  silver  at  16  to  i,  when 
the  market  ratio  is  nearer  32  to  i,  it  would  be 
exactly  the  same  as  offering  the  six  hundred  mil- 


8i 

lions  for  sale  at  half  price,  every  full-value,  or 
double-value  gold  dollar  for  a  half- value  silver  dol- 
lar, and  of  course  the  foreign  money  market  would 
take  the  whole  of  it,  and  make  three  hundred  mil- 
lions, gold  value,  or  six  hundred  millions  new 
American  silver  value,  by  the  transaction.  A  more 
thoroughly  criminal  financial  operation  it  would  be 
difficult  for  even  the  wildest  intellectual  hoodlum- 
ism  to  propose. 


CHAPTER  VI. 

THE  USES  OF  MONEY. 
6l.   MONEY  MEASURES  VALUE. 

'  The  things  which  money  will  do,  or  the  uses  to 
which  we  may  put  it,  may  all  be  covered  under 
four  heads.  In  the  first  place,  it  enables  us  to 
readily  estimate  the  comparative  value  of  different 
commodities.  We  become  familiar  with  the  stead- 
ily maintained  value  of  the  precious  metal,  and  we 
are  able  to  ascertain  how  much  of  the  metal  repre- 
sents the  value  of  any  given  commodity  and  at  what 
values  the  respective  commodities  can  be  offered 
for  exchange.  Money  thus  serves  primarily  as  a 
standard  of  value.  It  has  been  said  that  the  idea 
of  general  value  could  not  be  formed  without  the 
existence  of  money.  This,  however,  is  an  entire 
mistake.  The  comparison  of  commodities  neces- 
sarily results  in  a  general  idea  of  comparative  val- 
ues, and  primitive  culture  shows  the  rise  and  preva- 
lence of  this  idea  at  many  different  stages  of  com- 
6 


82 

parison  of  commodities,  all  the  way  up  to  that  of 
comparing  all  others  with  the  supreme  commodity, 
gold.  But  it  is  true  that  without  the  existence  of 
some  such  commodity  as  gold  it  would  not  be  easy 
to  form  ideas  of  comparative  values  and  to  count 
these  values  as  they  are  counted  by  the  use  of 
money. 

62.  MONEY  REGULATES  EXCHANGE. 

In  the  second  place,  money  serves  to  facilitate 
exchanges  or  trade.  It  does  this  solely  in  conse- 
quence of  and  subsequent  to  the  service  rendered 
by  money  as  a  ready  means  of  estimating  compara- 
tive values.  Writers  of  distinction  have  placed  the 
facilitating  of  exchanges  first.  But  this  is  not  the 
order  of  the  facts.  That  order  begins  with  the  use 
of  money  as  a  means  of  determining  comparative 
values,  and  only  after  this  does  money  serve  as  a 
medium  of  exchange.  The  use  of  money  as  a 
medium  of  exchange  is  so  conspicuous  as  to  natur- 
ally take  the  first  place  in  common  observation,  but 
some  reflection  will  show  that  this  use  arose  wholly 
in  consequence  of  the  fact  that  whatever  was 
employed  to  facilitate  exchanges  had  shown  itself 
a  convenient  measure  of  value.  To  exchange  oxen 
for  wheat  through  the  medium  of  gold  shekels,  the 
oxen  must  be  valued  in  gold  shekels  and  the 
wheat  also.  It  is  by  an  unconscious  inaccuracy 
that  writers  who  thoroughly  know  the  subject, 
mention  promotion  of  exchange  as  the  first  func 
tion  of  money,  and  measuring  of  values  as  the 
second. 


83 

63.    ARISTOTLE   ON   MONEY. 

Aristotle,  the  most  scientific  of  the  Greek  philoso- 
phers, speaking  of  the  resort  of  the  various  tribes 
of  mankind  to  barter,  and  the  part  which  it  played 
in  the  economy  of  human  society,  went  on  to  say : 

"From  this  it  came  about  logically  that  as  the 
machinery  for  bringing  in  what  was  wanted,  and 
of  sending  out  a  surplus,  was  inconvenient,  the  use 
of  money  was  devised  as  a  matter  of  necessity.  For 
not  all  the  necessaries  of  life  are  easy  of  carriage ; 
wherefore,  to  effect  their  exchanges,  men  contrived 
something  to  give  and  take  among  themselves, 
which,  being  valuable  in  itself,  had  the  advantage 
of  being  easily  passed  from  hand  to  hand  for  the 
needs  of  life;  such  as  iron  or  silver  or  something 
else  of  that  kind,  of  which  they  first  determined 
merely  the  size  and  weight,  but  eventually  put 
a  stamp  on  it  in  order  to  save  the  trouble  of  weigh- 
ing, and  this  stamp  became  the  sign  of  its  value." 
(Aristotle's  Politics,  I.  9.) 

It  was  not  so  much  that  men  contrived  an  instru- 
ment of  exchange.  They  found  commodities  the 
value  of  which  everywhere  and  always  could  be 
estimated  with  comparative  ease  and  certainty. 
The  cowry  money  shells,  pretty  shells  everywhere 
the  same,  so  common  as  to  have  a  steady  low  value, 
offered  themselves  as  types  of  value,  value-meas- 
urers. So  of  gold  or  silver  or  copper  by  weight. 
It  was  easy  to  employ  them  as  measurers  of  value, 
because  estimate  of  their  value  was  relatively  easy 
and  certain.  After  such  measurers  of  value  became 
known,  the  practice  of  using  them  to  promote 
exchange  sprang  up. 


84 

64.    MR.    HORACE   WHITE   ON   MONEY. 

Mr.  Horace  White  says,  for  a  definition  of  money, 
"anything  that  serves  as  a  common  medium  of 
exchange  and  measure  of  value."  But  he  also 
says :  '  The  simple  truth  is  that  gold  is  the  only 
money  of  civilized  nations"  (p.  112);  and  again: 
"The  money  of  the  country  consists  of  all  the  gold, 
plus  all  the  other  instruments  of  exchange  which 
are  redeemable  in  it."  (P.  226.)  He  further  says, 
in  the  opening  of  his  chapter  on  "General  Princi- 
ples :  "  "  Roescher  correctly  observes  that  if  money 
were  nothing  but  a  measure  of  value  it  would  on 
that  account,  if  on  no  other,  possess  value.  This 
fact  is  often  contradicted,  and  still  oftener  lost 
sight  of.  No  invention  or  discovery  since  the 
world  began  has  been  of  so  great  service  to  man- 
kind as  that  of  a  common  measure  of  value." 

"As  a  matter  of  fact,  however,  all  the  things 
that  have  been  used  as  money  have  possessed  other 
value,  and  we  have  the  best  reason  to  believe  that 
this  other  value  led  to  their  use  as  money  in  every 
instance  without  a  single  exception.  We  cannot 
conceive  that  gold  would  ever  have  been  brought 
into  use  as  money  if  it  had  not  possessed  certain 
qualities  of  beauty,  portability,  durability,  etc., 
which  caused  it  to  be  prized  as  an  article  of  adorn- 
ment." (P.  24.) 

The  accuracy  of  this  statement  of  facts  cannot  be 
questioned.  It  brings  out  very  clearly  the  founda- 
tion  fact  of  money,  the  convenience  of  making 
certain  commodities  serve  as  value-measurers,  not 
under  a  contrived  plan  to  make  them  such, 
but  because  they  manifested  themselves  as  such. 


85 

To  be  perfectly  accurate,  therefore,  Mr.  White's 
definition  should  say  "a  common  measure  of  value 
and  medium  of  exchange. 

65,  MONEY  AS  A  STANDARD  OF  VALUE. 

The  third  function  of  money  is  that  of  a  standard 
of  value  applicable  to  the  more  or  less  indefinite 
future.  It  is  one  thing  to  say  that  an  ounce  of  gold 
is  of  a  certain  value  in  trade  at  the  present  time  and 
quite  another  thing  to  say  that  it  shall  be  of  the 
same  nominal  value  ten,  fifty,  or  a  hundred  years 
from  now.  Money  in  proportion  as  it  is  good  for 
its  purpose,  —  not  to  say  perfect  for  its  purpose,  — 
will  serve  as  a  standard  for  future  value,  not  less 
than  as  a  standard  for  present  value. 

And  here  it  is  of  special  importance  to  observe 
that  the  urgent  necessity  for  good  money  of  one 
standard,  and  that  the  best  which  is  possible  in  the 
nature  of  things,  becomes  more  urgent  still  when 
money  is  used  as  a  means  of  designating  future 
values.  If  we  designate  the  value  ten  years  hence 
of  a  hundred  acres  of  land  as  ten  thousand  dollars 
it  may  make,  and  in  all  probability  will  make,  a 
very  great  difference  whether  that  is  ten  thousand 
dollars  in  gold  or  in  something  else  that  may  be 
legal  tender  as  dollars  ten  years  hence.  Even  with 
the  best  efforts  which  could  be  made  to  supply  sil- 
ver money  along  with  gold,  but  without  the  tie  to 
gold  of  a  substitute  coin  payable  in  gold,  all  the 
chances  are  that  the  ten  thousand  dollars  at  the  end 
of  the  ten  years,  if  paid  in  silver,  would  not  exactly 
and  fairly  pay  the  debt.  One  chance  at  least  would 
be  that  it  would  more  than  pay  the  debt  through 


86 

the  value  of  silver  at  the  time.  But  nearly  all  the 
chances  are  that  if  there  were  any  change  it  would 
be  in  the  other  direction. 

66.    LABOR  AND   MONEY. 

The  use  of  money  as  a  standard  of  value  is  espe- 
cially important  when  looked  at  from  the  point  of 
view  of  labor.  Labor  depends  on  future  payment 
in  some  definite  money.  No  interest  is  more 
imperative  than  that  which  labor  has  in  the 
making  of  money  of  the  best  known  substance. 
The  payment  of  labor  in  pieces  of  gold  always  and 
necessarily  means  more  than  any  other  payment 
which  labor  can  accept.  There  might  be  indeed 
good  payment  in  good  silver  money ;  that  is,  money 
made  as  nearly  as  possible  of  a  real  value  in  silver 
equal  to  its  nominal  value.  But  all  the  chances  are 
that  payment  in  silver  would  fall  short,  at  least  a 
little,  of  full  and  fair  payment,  and  that  absolute 
security  for  a  full  wage  could  not  be  had  except  on 
the  basis  of  payment  in  gold  or  in  substitute  money 
exchangeable  for  gold. 

Of  all  the  varieties  of  ignorance  blinding  man- 
kind to  their  true  interests,  there  could  hardly  be 
named  one  more  lamentable  than  the  ignorance 
which  should  permit  labor  in  the  modern  world  at 
large  to  demand  the  adoption  of  a  money  the  sole 
result  of  which  to  labor  must  be  the  substitution  of 
part  payment  for  whole  payment.  True  as  it  is 
that  half  a  loaf  is  better  than  no  bread,  it  is  simply 
insane  to  insist  on  having  a  half  loaf  instead  of  a 
whole  loaf.  Under  all  circumstances  whatever  the 
use  of  money  means  trade,  and  when  labor  is  offered 


87 

in  trade  for  wages,  the  labor  gains  or  loses  just  in 
proportion  as  the  money  in  which  wages  are  paid 
is  real  money  of  an  intrinsic  value  fully  equal  to 
the  nominal  value.  No  class  of  traders  have  more 
interest  in  gold,  as  money  of  the  highest  standard 
quality,  than  that  great  class  some  of  whose  mis- 
guided leaders  are  everywhere  proposing  general 
acceptance  of  a  system  of  money  which  will  regu- 
larly cheat  them  out  of  a  part,  and  perhaps  a  large 
part,  of  their  wages. 

67.    MONEY  AND   CREDIT. 

Under  the  head  of  "A  Store  of  Value,"  Mr.  Jev- 
ons  remarks  on  a  possible  fourth  function  of  money 
as  follows : 

' '  It  is  worthy  of  inquiry  whether  money  does  not 
also  serve  a  fourth  distinct  purpose  —  that  of 
embodying  value  in  a  convenient  form  for  convey- 
ance to  distant  places.  ...  At  times  a  person 
needs  to  condense  his  property  into  the  smallest 
compass,  so  that  he  may  hoard  it  away  for  a  time, 
or  carry  it  with  him  on  a  long  journey,  or  transmit 
it  to  a  friend  in  a  distant  country." 

The  obvious  justice  of  this  might  be  conceded 
without  looking  farther,  but  a  moment's  considera- 
tion of  what  use  of  money  all  organized  business, 
and  notably  the  business  of  banking,  involves,  and 
of  the  basis  upon  which  properly  issued  paper  can 
be  made  to  answer  as  money,  will  show  that  as  a 
store  of  value  capable  of  supplying  a  basis  of  credit, 
whether  in  the  form  of  ordinary  capital  or  in  the 
special  form  of  banking  capital,  money  has  a  fourth 
function  of  immence  significance. 


88 

68.    MONEY  AS   CAPITAL. 

In  the  case  of  any  organized  business  a  store  of 
money  is  the  foundation  upon  which  the  business, 
including  a  certain  amount  of  credit,  is  built.  The 
incalculable  importance  of  money  thus  serving  as 
capital,  and  thus  creating  credit  in  aid  of  the  busi- 
ness, cannot  be  too  strongly  expressed.  A  certain 
prejudice  widely  felt  against  capital  would  undoubt- 
edly disappear  if  the  necessary  and  beneficent  uses 
of  even  the  largest  and  most  questionable  aggrega- 
tions of  money,  in  the  notable  fortunes  of  the  multi- 
millionaires, were  better  understood.  What  the 
public  good  demands  is  not  repression  of  capital  as 
in  any  way  an  evil,  but  improved  service  by  capital, 
and  this  can  be  got,  in  all  probability,  more  easily 
rather  than  less  easily,  from  the  administrators  of 
great  aggregates  of  capital. 

69.    MONEY    AND   BANKING. 

The  use  of  money  to  create  credit,  and  to  carry 
on  the  constant  supply  of  organized  credit  in  aid  of 
all  kinds  of  business,  is  one  of  the  largest  and  most 
important  facts  of  the  present  organization  of 
human  affairs.  After  a  lucid  explanation  of  just 
what  banking  is,  and  how  it  involves  (i)  money, 
and  (2)  bank  credits  which  may  be  four  or  five 
times  the  amount  of  the  money,  Mr.  Horace  White 
says : 

"It  is  found  in  practice  that  $200,000  of  loans  and 
discounts  may  be  easily  carried  on  $50,000  of  cash. 
Thus,  the  loans  of  all  the  national  banks  in  the 
United  States  in  October,  1894,  were  $2,000,000,000 
and  their  cash,  including  silver  certificates  and 


89 

silver  dollars,  was  a  trifle  less  than  $400,000,000,  or 
only  one-fifth  the  amount  of  the  loans.  The  other 
four-fifths  was  credit,  and  perfectly  sound  credit, 
too,  for  it  had  passed  through  one  of  the  severest 
panics  in  our  history."  * 

70.  VALUE  OF  SOUND  BANKING. 

How  much  banking  means  may  be  understood  if 
we  recall  how  Mr.  Chase,  Secretary  of  the  Treasury 
in  Mr.  Lincoln's  cabinet,  began  his  great  financial 
operations  by  insisting,  against  the  wise  and  hon- 
est counsel  of  the  great  bankers,  on  taking  $170,- 
000,000  of  gold  and  paying  it  away,  instead  of  draw- 
ing checks  upon  the  banks  and  letting  them  pay, 
as  usual,  in  bank  notes  secured  by  their  gold  reserve. 
Mr.  Chase  by  this  operation  broke  the  back  of  the 
bank  power  of  the  country  to  grant  loans  and  dis- 
counts to  the  amount  of  $850,000,000.  The  banks 
could  have  loaned  him  $350,000,000  with  less  dan- 
ger than  the  giving  up  of  $170,000,000  of  gold 
involved.  If  Mr.  Chase  had  been  one  of  the  great 
kings  of  finance,  and  had  foreseen  how  great  the 
war  demands  would  be,  he  would  have  bought  gold 
from  abroad  with  bonds  until  he  had  put  $250,000,- 
ooo  of  gold  into  banks,  and  enabled  them  to  lend 
him  a  thousand  millions  to  carry  on  the  war.  But 
Mr.  Chase,  as  we  shall  presently  see  more  fully, 
had  no  proper  knowledge  of  the  dictates  of  wise 
and  honest  finance. 

*  Money  and  Banking,  p.  237. 


CHAPTER  VII 

THE  MINTING  AND  ISSUE  OF  MONEY. 
71.    COINAGE. 

The  work  of  the  mint  in  the  coining  of  money  is 
that  of  making  pieces,  of  gold,  or  silver,  or  other 
metal,  according  to  a  rule  of  weight  and  fineness, 
which  in  the  case  of  government  mints  has  been 
enacted  as  law.  Aristotle  says  that  the  first  coins 
were  pieces  of  metal  with  only  the  weight  stamped 
upon  them,  and  that  the  weight  stamp  became  the 
indication  of  the  value  of  the  coin.  Such  terms  as 
shekel,  talent,  drachma,  pound,  penny,  peso,  livre, 
and  mark,  designated  weights  at  first,  and  so  came 
to  designate  values.  Payment  by  weight  was 
expressed  in  Latin  by  the  term  stipendium,  from 
which  comes  our  word  stipend,  applied  especially 
to  the  pay  of  a  clergyman  or  other  ecclesiastic, 
because  the  church  so  long  used  the  Latin.  Our 
English  words  expend  and  expense  are  from  the 
Latin  expendo,  which  means  to  weigh  out. 

72.   AMERICAN   MINT   LAW. 

The  Congress  of  the  United  States  passed,  April 
2,  1792,  "An  Act  establishing  a  Mint  and  regulat- 
ing the  coins  of  the  United  States."  The  unit 
adopted  in  this  law  was  the  dollar,  "of  the  value 
of  the  Spanish  milled  dollar,"  with  a  specified 
weight  of  silver.*  The  gold  eagle  was  ordered  to 


371.25  grains  of  pure  silver." 


be  made  "of  the  value  of  ten  dollars  or  units/' 
The  standard  was  made  silver  on  the  very  natural 
ground  that  silver  was  the  money  of  common  use. 
In  Queen  Elizabeth's  time  in  England  silver  was 
the  common  measure  of  value  because  it  was  the 
money  of  the  people ;  and  gold  was  employed  in 
large  payments  in  quantities  counted  by  its  current 
value  in  silver.*  When  the  celebrated  John  Locke 
studied  the  subject,  he  advised  making  silver  the 
standard,  with  gold  coined  as  commercial  money, 
to  pass,  not  as  legal  tender,  but  at  its  market  value 
in  silver.  In  France  Mirabeau  took  the  same 
ground,  and  when,  in  1834,  the  United  States  law 
was  altered,  Raguet,  who  represented  the  best 
knowledge  of  that  time,  saw  the  matter  as  Locke 
and  Mirabeau  had  seen  it,  —  silver,  the  common 
money  of  the  day,  as  the  standard,  and  gold  trade 
money,  passing  at  its  commercial  value.  No  one 
yet  understood  how  bad  a  standard  of  value  silver 
might  prove  to  be,  from  its  greater  liability  than 
gold  to  drop  from  a  higher  market  value  to  a  lower ; 
nor  how  it  might  become,  from  its  bulk  and  weight, 
a  terribly  inconvenient  medium  of  exchange. 

73.    ORIGIN  OF  THE  DOLLAR. 

The  term  dollar,  daler  or  thaler,  comes  from  the 
German  word  thai,  which  is  the  same  as  dale  in 
English.  The  Count  of  Schlick  set  up  a  private 
mint  at  Joachimsthal,  or  Joseph 's-dale,  in  Bohemia, 
in  1581,  and  turned  out,  what  was  rare  then,  coins 
of  such  uniform  goodness  as  to  become  very  widely 

Jevons'  Money  and  the  Mechanism  of  Exchange ,  p.  17. 


92 

acceptable.  These  coins  were  called  Schlicken- 
thalers,  or  Joachim sthalers;  then  for  short  thalers, 
which  gave  dalers  or  dollars.  The  term  Dollar  is 
thus  an  historic  monument  of  German  science  and 
honesty. 

It  was  the  Spanish  dollar  which  the  Congress  of 
the  Confederation,  in  1785,  declared  the  monetary 
unit  of  the  United  States.  This  was  because, 
although  the  colonies  were  English,  and  accounts 
were  kept  in  pounds,  shillings,  and  pence,  there 
were  no  English  coins  in  circulation,  and  the  silver 
coins  in  actual  use  were  nearly  all  the  Spanish  or 
Mexican  silver  dollars.  When  gold  and  silver  were 
both  declared  full  legal  tender  in  the  United  States, 
in  1792,  the  division  of  the  dollar  into  hundredths, 
or  cents,  was  first  adopted.  This  gave  it  great 
value  as  a  unit  of  account.  The  law  of  1792  made 
dollars,  dimes,  and  cents,  the  money  of  account  of 
the  United  States,  but  until  after  the  civil  war  old 
colony  usage,  differing  in  different  States,  kept  on 
with  the  divisions  of  the  dollar  which  the  early  use 
of  Spanish  silver  had  made  familiar.  New  Eng- 
land had  a  shilling  which  was  six  to  the  dollar; 
New  York  one  which  was  eight;  and  Pennsylvania 
one  (a  levy,  or  eleven  pence)  which  was  seven  and  a 
half,  and  the  half  of  which  was  a  fip  (or  five  pence). 
The  dollar  with  its  decimal  divisions  is  now  com- 
pletely established.  Mr.  Jevons  says  of  it: 

"It  is  firmly  adopted  as  the  money  of  a  nation, 
which,  as  far  as  human  wisdom  can  penetrate  the 
future,  is  destined  to  be  the  most  numerous,  rich, 
and  powerful  in  the  world.  That  nation,  which 
has  arisen  from  the  best  stock  of  England,  has 


93 

absorbed  much  of  the  best  blood  of  other  European 
nations,  and  has  inherited  the  richest  continent  in 
the  world,  must  have  an  importance  in  coming 
times  of  which  even  Americans  are  barely  con- 


74.    FAILURE   OF   HAMILTON'S  DOLLAR. 

The  Spansh  dollar  familar  to  the  early  American 
colonies  was  brought  in  by  the  trade  with  the  West 
Indies.  The  American  dollar,  made  upon  Hamil- 
ton's plan,  passed  in  trade  in  the  West  Indies,  as 
equal  to  the  Spanish.  But  it  was  in  fact  a  trifle 
(2  1-2  grains)  lighter  than  a  new  silver  Spanish 
dollar.  For  every  American  dollar  sent  to  the 
West  Indies  a  Spanish  dollar  a  trifle  heavier  could 
l)e  had,  and  by  getting  this  recoined  into  an  Ameri- 
can dollar,  a  trifle  of  silver  would  be  left  over  for 
the  operator.  The  recoinage  was  done  by  the  mint 
free.  It  only  paid  about  one  cent  on  every  dollar, 
Tsut  all  the  American  coinage  went  to  the  workers 
of  the  operation,  the  public  got  the  benefit  of  hardly 
any  of  the  coins  made  for  them,  but  had  to  get 
along  with  old  and  worn  foreign  coins,  and  the 
mint  was  running  almost  wholly  for  the  benefit  of 
the  moneymongers. 

75.    PRESIDENT  THOMAS    JEFFERSON  SUSPENDS  COIN- 
AGE  OF  THE   SILVER   DOLLAR. 

President  Jefferson,  seeing  what  a  failure  Hamil- 
ton's dollar  was,  stopped  the  coinage  of  it,  and  this 
suspension  lasted  until  1836,  making  forty-four 

*  Money  and  the  Mechanism  of  Exchange,  p.  172, 


94 

years  of  failure  of  the  original  American  dollar.* 
To  May  ist,  1806,  there  had  been  coined  only 
1,433,457  of  Hamilton's  dollars.  Jefferson's  order 
to  Robert  Pattison,  director  of  the  mint,  to  which 
the  name  of  James  Madison,  Department  of  State, 
was  signed,  was  in  these  words  : 

"The  President  directs  that  all  the  silver  to  be 
coined  at  the  mint  shall  be  of  small  denomination, 
so  that  the  value  of  the  largest  pieces  shall  not 
exceed  half  a  dollar." 

The  fractional  pieces  were  at  that  time  of  full 
value,  and  nearly  all  of  them  went  the  same  way 
that  the  dollars  had  gone.  The  report  of  the 
House  Committee  on  coinage  in  1832  stated  that  to 
1830  there  had  been  a  total  coinage  at  the  mint  of 
$37,000,000,  of  which  four- fifths  had  been  taken  out 
of  the  country,  and  not  more  than  one-fifth  had 
been  circulated.  The  law  legalized  the  circulation, 
in  1793,  of  a  variety  of  foreign  coins,  which  were 
worn  and  light  weight,  and  these  were  the  princi- 
pal money  of  the  people.  As  Mr.  Upton  says: 
"The  effort  of  the  country  to  provide  coin  for  cir- 
culation of  any  kind  was  a  dismal  failure." 

76.  HAMILTON'S  GOLD  A  FAILURE  ALSO. 

At  the  same  time  that  Hamilton's  plan  failed  to 
give  silver,  it  failed  also  to  give  gold  coin.  Under 
the  ratio  of  15  to  i  gold  coin  were  worth  more  to 
sell  than  to  circulate,  and  however  many  the  mint 
turned  out,  the  moneymongers  took  all  of  them 
and  the  public  had  none.  Gold  began  to  grow 


*  White's  "  Money  and  Banking"  p.  41. 


95 

scarce,  says  Mr.  White,  in  1810,  and  had  wholly 
disappeared  in  1817.  Raguet,  the  finance  expert 
of  the  time,  wrote  in  1820  of  "the  disappearance  of 
gold  from  the  United  States, ' '  Two  years  later  he 
said  that  "although  the  coinage  of  gold  continued 
to  be  large  ($1,319,030  in  1820),  not  a  gold  coin  was 
anywhere  to  be  seen  in  circulation. ' '  As  Mr.  White 
says :  ' '  The  facilities  of  the  mint  were  simply  used 
by  merchants  to  certify  the  weight  and  fineness  of 
gold  for  exportation. ' '  Under  the  law,  as  Hamil- 
tion's  ideas  shaped  it,  the  mint  was  run,  in  making 
silver  coin  and  in  making  gold  coin,  for  almost  the 
sole  benefit  of  the  moneymongers.  The  United 
States  had  two  standard  moneys,  silver  and  gold, 
but  none,  or  next  to  none,  in  use.  The  monarchies 
of  Europe,  said  Thomas  H.  Benton,  in  1834,  had 
the  use  of  gold;  so  had  the  young  republics  of 
South  America  and  even  the  negroes  of  San  Do- 
mingo; but  for  twenty  years  the  yeomanry  of 
America  had  had  none ;  not  even  though  their  mint 
was  making  it  all  the  time.  Of  the  mint  Benton 
said: 

' '  It  has  coined,  and  that  at  a  large  expense  to  the 
United  States,  2,262,717  pieces  of  gold  worth 
$11,852,890,  and  where  are  these  pieces  now?  Not 
one  of  them  to  be  seen ;  all  sold  and  exported. ' ' 

77-    SILVER    THROWN    OUT    BY    PRESIDENT    ANDREW 
JACKSON. 

President  Andrew  Jackson,  June  28,  1834,  signed 
a  bill  the  purpose  of  which  was  to  put  an  end  to 
conditions  of  coinage  which  had  made  the  United 
States  mint,  to  use  Mr.  Upton's  words,  "a  most 


96 

ridiculous  and  absurd  institution. ' '  The  bill  altered 
the  ratio  from  15  to  i  to  16  to  i.  There  was  no 
gold  in  circulation  and  only  about  eight  millions  of 
fractional  silver.  The  United  States  Bank  had 
some  $13,000,000  of  its  notes  in  circulation.  The 
new  bill  was  expected  to  provide  gold,  and  at  the 
same  time  get  rid  of  the  bank.  The  actual  result 
was  to  make  a  complete  riddance  of  our  silver. 
The  ratio  16  to  i  was  borrowed  from  Mexico, 
through  the  proposal  of  Senator  Thomas  H.  Benton, 
and  against  the  advice  of  financial  experts,  who 
put  the  market  rate  at  15  5-8.  The  result  of  this 
1 6  to  i  ratio  was  to  make  the  silver  coin,  even  more 
than  before,  worth  more  to  sell  than  to  keep  in  use 
as  money.  The  mint  coined  the  standard  silver 
dollars,  but  only  to  enable  the  holders  of  silver  to 
have  it  in  good  shape  to  sell.  None  of  it  went  into 
circulation  as  money.  Mr.  Upton  says:  "Silver 
was  taken  out  of  circulation  under  the  operation  of 
the  new  ratio  as  effectually  as  if  its  further  coinage 
had  been  prohibited  under  the  penalty  of  death, 
and  those  voting  for  the  measure  understood  that 
such  would  be  the  result,  and  when  it  came  they 
did  not  plead  ignorance  or  refer  to  the  act  as  the 
crime  of  1834."*  The  reason  for  this  was  the  uni- 
versal desire  to  have  gold. 

78.    HORACE  WHITE  ON   "  THE   GOLD   BILL"  OF  1834. 

Mr.  Horace  White  says  of  the  bill  of  1834,  that  it 
was  termed  the  Gold  Bill,  and  that  it  came  from  a 
special  committee  of  the  House,  of  which  Mr.  Camp- 

*  Coin  Catechism ,  p.  31. 


97 

bell  P.  White,  of  New  York,  was  chairman.  Of 
the  passage  of  the  bill  Mr.  Horace  White  gives  this 
account: 

"The  bill,  as  reported  to  the  House  by  Mr. 
White,  provided  for  a  ratio  of  i  to  15.6,  but  when 
it  came  up  for  discussion  Mr.  White  moved  an 
amendment  making  the  ratio  i  to  16;  and  this 
amendment  was  adopted  without  a  division.  Then 
another  amendment  was  offered  making  the  ratio 
i  to  15.625,  and  it  was  supported  on  the  ground 
that  it  was  the  true  market  ratio,  and  that  it  would 
keep  gold  and  silver  in  concurrent  circulation.  The 
adoption  of  the  ratio  of  i  to  16,  it  was  contended, 
would  drive  silver  out  of  circulation.  Neverthe- 
less, the  amendment  was  voted  down  —  yeas,  52 ; 
nays,  127.  The  bill  was  then  passed  in  the  House 
by  145  to  36,  and  in  the  Senate  by  35  to  7.  It  was 
perceived  on  both  sides  that  the  passage  of  the  bill 
would  make  the  United  States  a  gold-standard 
country  in  practice." 

The  desire  to  have  gold  in  circulation,  the  hope 
of  promoting  the  production  of  gold  in  the  Southern 
states,  where  the  output  was  already  considerable 
($868,000  in  1833),  and  the  wish  to  make  gold  coin 
take  the  place  of  bank  notes,  found  an  opportunity 
to  strike  a  blow  at  silver  in  the  fact  that  it  had 
proved  a  dismal  failure.  The  absentee,  good-for- 
nothing-for-money,  merely  money  mongers  and 
merchandise  silver  dollar,  was  left  a  fact  in  law, 
partly  because  many  contracts  were  in  existence 
expressly  calling  for  payment  in  silver,  and  partly 
because  the  halves,  quarters,  and  dimes  which 
were  the  small  money  of  the  people,  were  fractional 
7 


98 

parts  of  the  silver  dollar,  made  tinder  the  same  law, 
and  how  to  make  them  otherwise  was  not  yet 
understood.  As  a  matter  of  fact  the  small  coins 
were  about  as  hard  to  keep  in  circulation  as  money 
as  the  dollar,  unless  they  were  worn  and  so  of  light 
weight,  but  the  effort  to  have  them  could  not  be 
given  up ;  and  so  the  dollar  and  its  parts  were  still 
coined,  and  the  double  standard  was  retained  in 
law  although  discredited  by  all  experience  from 
1792  to  1834,  and  although  discarded  in  practice. 

79.    FIRST  AMERICAN   SUCCESS   WITH   SILVER. 

Although  the  law  of  1834  gave  the  United  States 
gold  money,  the  old  difficulty,  the  constant  taking 
away  of  the  silver,  was  worse  than  ever,  because 
gold  worth  less  than  its  face  value  could  be  used  to 
buy  not  only  all  fresh  native  silver  coins,  but  even 
the  best  of  the  foreign  coins,  leaving  very  few 
small  coins  for  use  as  the  necessary  money  of  the 
common  people.  In  1852,  when  the  American  mint 
had  been  sixty  years  in  operation,  it  had  not  at  any 
time  given  the  American  people  silver  coin  so  made 
and  issued  as  to  be  of  service.  A  bill  which  became 
law  February  21,  1853,  borrowed  from  English 
practice  a  coinage  plan  for  fractional  currency  of 
about  seven  per  cent,  less  real  value  than  the  face 
value,  to  be  given  out  at  the  face  value,  and  to  be 
legal  tender  for  small  sums  up  to  $5.  Three  years 
later  the  foreign  silver  pieces  were  made  redeem- 
able at  a  rate  slightly  above  their  market  value, 
with  the  result  of  buying  them  all  in  and  having 
only  American  coins  in  circulation.  "The  country 
then,"  says  Mr.  Upton,  "had  for  the  first  time  in 


99 

its  history  (1776-1856—80  years),  its  own  gold  and 
silver  coins  circulating  side  by  side,  ample  in 
amount,  throughout  the  country,  neither  driving 
the  other  from  circulation  or  skulking  because  for- 
eign coins  were  treated  better  in  law  than  they 


80.    THE  SILVER  DOLLAR  STILL  A  FAILURE. 

The  standard  silver  dollar  was  not  affected  by 
the  law  of  1853.  It  still  held  its  position,  but  this 
only  meant  that  the  American  mint  supplied  the 
trade  in  silver  with  the  American  honorary  silver 
piece.  It  cut  no  figure  as  money ;  had  never  done 
any  service  as  money ;  was  an  absentee,  and  des- 
tined to  remain  so  until  1873,  when  ninety  years  of 
continuous  failure  would  bring  about  its  dismissal 
from  service.  Mr.  Upton  says  of  ' '  the  total  amount 
and  the  character  of  money  in  circulation  in  1860:  " 

"According  to  an  estimate  of  the  Secretary  of 
the  Treasury  the  amount  was  $435,000,000,  of  which 
$180,000,000  is  known  to  have  been  represented  by 
bank  notes,  leaving  $255,000,000  of  coin.  This 
coin  was  admittedly  made  up  of  our  gold  and  sub- 
sidiary coinage,  of  which  the  latter  was  probably 
not  above  $43,000,000.  The  estimates  of  aggregate 
specie  circulation  and  of  its  division  between  gold 
and  silver  at  that  time  vary  somewhat,  but  in  no 
case  does  the  estimate  include  any  silver  dollars  as 
in  circulation. ' '  f 


*  Coin  Catechism. 

f  Coin  Catechism,  p.  39, 


100 
8l.   THE    LEGAL    TENDER    PAPER    DISASTER  OF    1862. 

The  progress  of  the  United  States  in  the  direc- 
tion of  good  money,  of  the  right  kinds,  both  gold 
and  silver,  and  ample  in  amount,  was  arrested  in 
1862  by  one  of  the  most  discreditable  and  disastrous 
departures  from  sound  money  principles  on  record 
in  history.  For  the  purposes  of  the  great  civil  war 
which  began  in  1861,  the  United  States,  by  August 
of  that  year,  needed  large  sums  of  money,  which 
could  be  had  only  by  large  use  of  the  national 
credit.  The  Secretary  of  the  Treasury  was  Salmon 
P.  Chase,  a  man  of  unsurpassed  character  and  gen- 
eral ability,  and  the  representative,  in  Mr.  Lincoln's 
cabinet,  of  Ohio,  a  State  deservedly  counted  as  the 
heart  of  the  Republic.  The  sole  question  confront- 
ing Mr.  Chase  was  how  to  wisely  and  honestly  use 
the  national  credit  in  getting  large  sums  of  money ; 
it  might  be  many  of  them,  one  after  another,  into 
the  indefinite  future.  But  the  high  intelligence 
and  lofty  patriotism  of  Mr.  Chase  not  only  took 
no  note  of  the  plain  dictates  of  wisdom  and  honesty 
in  finance,  but  they  pushed  aside  the  advisers  who 
knew  those  dictates  thoroughly,  and  plunged  him 
into  precisely  the  abyss  which  the  worst  rascals  of 
criminal  finance  would  have  dug  for  him,  that  of 
getting  money  on  the  unsecured  and  irregular 
paper  of  the  United  States,  instead  of  on  regular 
paper  with  the  best  possible  security.  The  better 
the  paper  the  more  would  it  be  honestly  handled ; 
the  worse  the  paper  the  more  would  the  rascals  be 
able  to  use  it  to  their  profit.  Mr.  Chase  put  the 
United  States  completely  into  the  hands  of  the 
rascals,  with  a  profit  to  them  of  hundreds  of  mil- 


IOI 

lions,  every  dollar  of  which  might  have  been  saved 
by  wise  and  honest  dealing  with  the  accredited 
experts  of  finance. 

82.    HOW   MR.   CHASE   BROKE   THE   BANKS. 

The  amount  of  gold  in  the  country  was  unusually 
large  and  banking  operations  based  on  it  were 
unusually  safe.  The  most  obvious  wisdom  was  to 
make  the  most  of  this,  carefully  guarding  the  gold 
as  a  reserve  in  the  banks,  and  borrowing  of  them, 
not  by  taking  their  gold,  but  by  an  arrangement  to 
draw  checks  upon  them,  which  they  would  pay  in 
the  usual  way,  to  some  extent,  perhaps,  in  gold, 
but  presumably  in  their  notes.  Mr.  Chase  nego- 
tiated three  loans  of  fifty  million  dollars  each,  at  a 
meeting,  August  9,  1861,  with  the  representatives 
of  the  chief  American  banks,  in  New  York,  but  he 
refused  their  advice  to  take  the  money  through 
checks  drawn  upon  them,  and  insisted,  with  lofty 
but  terribly  mistaken  self-consciousness  of  high 
honor  in  finance,  upon  having  the  gold,  and  upon 
having  demands  paid  in  gold  which  could  just  as 
well  as  not  have  been  paid  in  bank  notes.  One 
hundred  and  seventy  million  dollars  in  gold  were 
at  considerable  expense  carried  to  different  parts  of 
the  country,  and  paid  away,  when  it  was  in  reality 
worth  more  than  its  nominal  value,  and  as  the  bank 
reserve  of  the  country  was  worth  vastly  more  than 
Mr.  Chase  got  for  it.  A  worse  blunder  of  opinion- 
ated ignorance  could  not  have  been  made,  at  that 
moment,  but  the  moment  speedily  came  in  which 
the  opportunity  for  worse  was  presented,  and 
meanwhile  Mr.  Chase  had  not  learned  to  take  advice 


102 

from  those  who  knew  the  dictates  of  wisdom  and 
honesty  in  finance. 

83.    SEVENTEEN   YEARS   OF    PAPER   MONEY. 

The  effect  of  Mr.  Chase's  disregard  of  the  advice 
of  James  Gallatin  and  other  representative  Ameri- 
can bankers,  not  to  take  away  from  the  banks  the 
coin  basis  of  credit,  was  to  reduce  them  to  suspen- 
sion of  specie  payment,  December  28th,  1861, — a 
suspension  which  lasted  until  December  31,  1878, 
and  left  upon  the  greatest  period  in  American  his- 
tory a  blot  of  discredit  and  dishonor  which  the 
patriot  cannot  sufficiently  regret.  Mr.  Upton's 
excellent"  Coin  Catechism"  after  briefly  sketching 
what  was  done  in  the  old  days  of  colonial  inexperi- 
ence and  perhaps  desperate  necessity,  raises  the 
question  whether  anything  of  the  kind  could  have 
happened  under  a  government  organized  on  the 
basis  of  our  Constitution ;  and  the  facts  compel  this 
answer : 

"In  1862  the  government  of  the  United  States 
authorized  paper  promises  in  the  form  of  notes, 
silent  as  to  the  time  of  their  redemption,  to  be 
equal  in  debt-paying  power  to  the  metallic  money 
they  represented,  though  at  the  time  the  promises 
were  worth  in  current  exchange  less  than  one-half 
as  much  as  the  coin  itself. ' ' 

"The  Supreme  Court  of  the  United  States  held 
that  the  National  government  by  its  inherent 
power  of  sovereignty  had  a  right  to  change  the 
terms  of  all  contracts  whenever  the  law-making 
power  deemed  such  a  change  necessary  for  the  wel- 
fare of  the  country." 


103 

But  it  was  not  a  question  of  desperate  peril  to 
the  country;  not  in  the  least;  it  was  a  question 
of  wisely  and  honestly  using  the  national  credit  to 
get  money  to  carry  on  the  war;  a  question  of 
straightforward  honest  borrowing,  at  a  saving, 
as  it  would  have  proved,  of  hundreds  of  millions,  or 
of  round-about,  rascally,  lawless  borrowing,  at  a 
loss  of  hundreds  of  millions,  not  to  speak  of  the 
cheating,  by  payment  in  half  worthless  money,  of 
all  persons  under  contract  to  give  service  at  fixed 
rates.  The  issue  of  unsecured,  irregular  promises 
to  pay,  making  them  legal  tender,  and  requiring 
that  they  should  be  used  as  money,  the  payment  of 
duties  on  imports  and  of  interest  on  the  regular 
public  debt  being  alone  excepted,  was  a  long  way 
off  from  the  easier,  the  cheaper,  and  the  more  hon- 
est, not  only  borrowing  of  money,  but  carrying  on 
of  the  business  of  the  nation.  It  was  an  act  of 
financial  and  moral  lawlessness,  absolutely  inex- 
cusable, and  impossible  to  have  occurred,  had  not 
our  system  put  in  the  place  of  chief  responsibility 
a  man  who  could  venture  to  disregard  the  advice 
of  financial  experts,  in  dependence  upon  his  own 
uninstructed,  and  in  fact  lamentably  incompetent 
judgment  on  questions  of  money. 


IO4 
CHAPTER  VIII. 

FIATISM  AND  CURRENCY. 
84.   LEGAL   FIAT  AND   MONEY. 

Fiatism  is  a  method  of  making  current  by  law, 
making  to  pass,  that  is  as  money,  or  to  pass  in  bar- 
ter instead  of  money,  something  which  would  not 
pass  at  all,  or  would  not  pass  exactly  the  same,  but 
for  the  law.  For  pure  honest  money  in  gold  and 
silver  current  by  weight,  there  is  no  necessity  for 
any  government  fiat,  but  there  is  convenience,  first 
in  a  government  stamp  certifying  the  weight  and 
fineness  of  either  bars  or  coins  of  gold  or  silver, 
and  second  in  a  law  designating  the  conditions  of 
legal  tender  of  such  bars,  ingots,  coins,  or  other 
pieces  of  precious  metal.  As  with  other  matters  of 
recognized  right  the  administration  of  which  is 
facilitated  by  state  organization  and  state  laws,  all 
matters  of  money  are  given  security  by  laws  prop- 
erly recognizing  what  is  right  and  what  the  public 
interest  requires.  Coinage  of  gold  and  silver  done 
by  government  and  with  the  government's  stamp 
upon  it,  is  the  highest  practical  security  to  those 
who  handle  coins,  that  they  are  what  they  profess 
to  be.  Governments  usually  forbid  coinage  by 
private  persons,  not  because  it  could  not  be  done, 
but  because  the  opportunity  to  cheat  is  such  as  to 
make  it  extremely  difficult  to  provide  securities 
against  it.  It  is  of  value,  therefore,  even  for  gold 
and  silver  current  by  weight,  to  have  the  pieces 
weighed  and  stamped  by  the  government,  and  to- 


have  distinct  notice  by  law  of  the  manner  of  their 
currency.  So  far,  moreover,  as  money  consists  of 
coins  in  a  secondary  position,  like  those  of  gold 
tinder  a  silver  standard,  or  those  of  silver  under  a 
gold  standard,  and  all  subsidiary  small  coins,  legal 
fiat  is  necessary  to  determine  how  such  coins  shall 
pass ;  to  what  amount  they  shall  be  legal  tender, 
and  whether  they  shall  be  passable,  up  to  the  limit 
of  tender,  on  a  parity  with  the  standard  superior 
money. 

85.    LEGAL  FIAT  AND  THE  STANDARD. 

A  supremely  important  governmental  act  is  that 
of  determining  a  money  standard  of  value.  For 
many  centuries  the  nations  of  Europe  had  no  sys- 
tem of  proper  regulation  and  the  result  was  a  con- 
fusion of  varying  standards  enormously  injurious 
to  the  public,  and  as  enormously  beneficial  to  the 
money  brokers.  In  the  seventeenth  and  eighteenth 
centuries  most,  if  not  all  civilized  countries, 
employed  both  gold  and  silver  as  money  of  full 
legal  tender,  the  legal  ratio  between  them  being 
fixed  by  some  such  fiat  as  that  of  15,  15  1-2,  or  16 
to  i,  which  means  that  15,  15  1-2,  or  16  ounces  (or 
pounds)  of  coined  silver  shall  pass  as  equal  to  one 
ounce  (or  pound)  of  coined  gold;  the  theory  being 
that  this  is  the  ratio  of  value  between  the  two 
metals  by  weight  in  the  metal  market,  or  at  least 
near  enough  to  it  to  answer  coinage  and  currency 
purposes.  Experience,  however,  has  always  shown 
the  impossibility  of  keeping  the  metals  at  parity 
of  value  with  each  other,  and  the  absolute  certainty 
that  whichever  of  the  two  standard  metals  chanced 


io6 

at  any  moment  to  be  of  a  higher  value  than  the 
other  in  the  market,  the  money  changers  would 
take  all  of  it  out  of  circulation,  giving  in  exchange 
coin  of  the  cheaper  metal,  and  making  a  profit  for 
themselves  by  the  transaction  in  proportion  to  the 
value  of  the  one  above  the  other.  What  may  be 
called  the  see-saw  of  the  standards  has  been  for 
ages  the  money  brokers'  opportunity  to  regularly 
fleece  whatever  governments  and  people  undertook 
the  foolish  experiment  of  trying  to  have  two  stan- 
dards of  value. 

86.   THE   ENGLISH   LAW   OF   STANDARD. 

The  first  nation  to  comprehend  the  situation,  and 
to  provide  a  remedy  by  choosing  of  the  two  stan- 
dards that  one  which  was  manifestly  the  best,  and 
which  could  be  made  the  steadiest  and  most  secure, 
was  England,  in  the  adoption  in  1816  of  the  gold 
standard.  One  of  the  most  famous  monetary 
studies  ever  made  was  that  made  by  the  Earl  of 
Liverpool,  whose  "  Treatise  on  the  Coins  of  the  Realm  " 
first  set  forth  the  principles  of  a  composite  money 
system,  in  which  gold  should  take  the  place  of  a 
standard,  and  silver  should  occupy  a  subordinate 
position,  with  limitations  to  its  coinage  and  use 
suited  to  keep  it  in  that  position.  In  this  com- 
posite system  coins  of  gold,  such  as  the  English 
sovereign  and  half  sovereign,  are  adopted  as  the 
standard  of  value  and  principal  legal  tender,  and 
subordinate  coins  of  silver  are  furnished  for  the 
purpose  of  sub-division  and  as  legal  tender  for  lim- 
ited amounts  only.  These  subordinate  coins  are 
made  of  such  weights  that  their  value  as  metal 


TO/ 

cannot  rise  above  the  nominal  value  at  which  they 
are  exchangeable  for  gold. 

The  essential  part  of  the  Act  of  Parliament  of 
1816,  on  which  the  English  monetary  system  is 
based,  was  in  these  words:  "And  whereas  at  vari- 
ous times  heretofore  the  coins  of  this  realm  of  gold 
and  silver  have  been  equally  a  legal  tender  for 
payments  to  any  amount,  and  great  inconvenience 
has  arisen  from  both  those  precious  metals  being 
concurrently  the  standard  measure  of  value  and 
equivalent  for  property ;  and  it  is  expedient  that 
the  gold  coin,  made  according  to  the  indentures  of 
the  mint,  should  henceforth  be  the  sole  standard 
measure  of  value  and  legal  tender  for  payment, 
without  any  limitation  of  amount,  and  that  the 
silver  coin  should  be  a  legal  tender  to  a  limited 
amount  only,  for  the  facility  of  exchange  and  com- 
merce: Be  it  therefore  enacted,  that  from  and 
after  the  passing  of  this  Act,  the  gold  coin  of  this 
realm  shall  be  and  shall  be  considered  and  is  hereby 
declared  to  be  the  only  legal  tender  for  payments, 
except  as  hereinafter  provided,  .  .  .  and  no 
tender  of  payment  of  money  made  in  the  silver 
coin  of  this  realm  of  any  sum  exceeding  the  sum  of 
forty  shillings  at  any  one  time,  shall  be  reputed  a 
tender  in  law, ' ' 

87.    THE   ENGLISH   LAW   OF  SILVER. 

For  securing  the  subordinate  position  of  silver, 
in  this  English  system  of  gold-bimetallism,  the 
weight  of  the  silver  coin  was  reduced  about  six  per 
cent. ;  and  with  the  recent  considerable  fall  in  the 
price  of  silver,  this  now  means  that  an  English 


io8 

silver  coin  is  worth  hardly  more  than  half  its  face 
value,  and  justice  to  silver  as  good  money  kept 
reasonably  near  in  intrinsic  value  to  standard 
money,  although  not  itself  a  standard,  manifestly 
demands  considerable  increase  in  the  weight  of  the 
silver  coin.  This,  however,  is  of  less  importance 
to  England  from  the  fact  that  the  coinage  of  silver, 
which  is  at  the  discretion  of  the  mint,  is  kept 
within  narrow  limits;  limits,  in  fact,  which  go  far 
to  make  the  English  practice  one  of  gold  mono- 
metallism of  money,  qualified  by  the  use  of  Bank  of 
England  notes,  which  are  paper  payable  in  gold ; 
and  yet  the  case  of  India,  a  part  of  the  British 
empire,  with  its  enormous  employment  of  silver  as 
money,  practically  makes  the  whole  British  system 
one  of  gold  standard  bimetallism  of  money. 

88.   FRAUD   BY   FIATISM. 

The  fiatism  which  has  had  the  largest  place  in 
history,  and  which  still  lingers  to  plague  the  world 
with  its  iniquitous  and  mischievous  operations,  is 
that  by  which  governments  have  issued  as  money 
either  coins  or  paper  more  or  less  false  and  fraudu- 
lent in  character,  or  at  least  more  or  less  doubtful 
and  worthless,  for  lack  of  security,  or  even  expec- 
tation of  security,  for  their  payment.  The  chief 
Impenitent  Thieves  of  history  in  this  matter  have 
been  unscrupulous  kings  and  reckless  despots, 
undertaking  by  criminal  monetary  schemes  to  rob 
their  subjects.  So  constantly,  however,  and  so 
largely  was  this  method  of  criminal  finance  worked, 
during  centuries  of  universal  ignorance  and  gen- 
eral denial  of  popular  rights,  that  something  like  a 


109 

tradition  of  its  legitimacy  was  established,  as  in  the 
same  way  a  tradition  of  the  legitimacy  of  lotteries 
was  established.  Hence  the  possibility  of  such  an 
extraordinary,  and  we  must  say  such  disgraceful  ex- 
hibitions of  facility  in  criminal  finance  as  appeared 
in  the  early  American  colonies,  and  during  the 
American  Revolution,  in  the  issue  of  paper  money, 
under  circumstances  not  only  doubtful  to  the  last 
degree  as  to  proper  prospect  of  payment,  but  thor- 
oughly discreditable  and  dishonest  in  respect  of  the 
means  taken  to  provide  securities  for  payment. 

89.    EARLY   AMERICAN   FIATISM. 

In  the  early  history  of  the  American  colonies 
fiatism  was  very  largely  and  very  disastrously 
applied,  both  in  the  regulation  of  barter,  to  make 
commodities  pass  at  a  price  fixed  by  law,  or  at  the 
current  price,  and  in  the  issue  of  paper  money.  In 
Massachusetts  in  1631  a  fiat  of  the  General  Court 
ordered  that  corn  should  pass  for  payment  of  all 
debts  at  the  price  it  was  usually  sold  for,  unless 
money  or  beaver  skins  were  expressly  stipulated. 
This  legislative  fiat  continued  in  force  and  opera- 
tion for  more  than  half  a  century.  In  1635  musket 
balls,  to  the  extent  of  twelve  pence  in  one  payment, 
were  made  passable  the  same  as  coin.  In  1640  the 
prices  at  which  different  grains  might  be  tendered 
were  fixed  by  law ;  Indian  corn  at  four  shillings 
per  bushel,  wheat  at  six  shillings,  rye  and  barley 
at  five  shillings,  and  peas  at  six  shillings. 

The  currency  of  Indian  wampum  money  was  in 
part  left  to  trade  estimate,  depending  on  the  fact 
that  the  Indians  would  take  it  in  payment  for 


no 

beaver  skins  and  that  the  beaver  skins  were  a  good 
commodity  for  export.  In  course  of  time  the 
beaver  trade  declined  and  this  destroyed  the  value 
of  the  wampum  money  to  the  whites.  A  fathom 
of  wampum,  consisting  of  360  white  beads,  passed  as 
worth  sixty  cents.  In  the  years  1641-1643  a  Mas- 
sachusetts fiat  made  wampum  legal  tender  to  the 
amount  of  ten  pounds.  This  was  then  reduced  to 
forty  shillings,  and  for  taxes  the  wampum  money 
was  not  received  at  all. 

The  story  of  fiatism  in  Virginia,  applied  to  the 
regulation  of  barter,  affords  a  most  remarkable 
illustration  of  ignorance  and  folly  seeking  the  pub- 
lic good,  yet  accomplishing  little  but  mischief  and 
injury.  The  attempt  especially  to  make  tobacco 
pass  in  trade  at  values  fixed  from  time  to  time  by 
law,  showed  many  varieties  of  failure  without  any 
example  of  success.  The  public  opinion  which  sus- 
tained it  was  largely  that  of  the  planters  and  farm- 
ers, who  thought  they  would  be  benefited  by  fiat 
values  put  upon  their  produce;  but  no  matter 
what  scheme  was  tried,  failure  and  failure  only  was 
the  invariable  result. 

90.   A   CELEBRATED   INSTANCE   OF  EXTREME  FIATISM, 

One  of  the  most  desperate  fiatist  attempts  ever 
made  was  that  of  France  when  her  finances  were 
under  the  control  of  the  celebrated  financier  and 
projector  of  commercial  schemes,  John  Law.  On 
the  nth  of  March,  1720,  a  government  fiat,  designed 
to  help  the  value  of  paper  money,  decreed  that, 
after  the  first  of  May,  gold  should  no  more  be  used 
in  the  payment  of  debts,  nor  silver  after  the  first  of 


Ill 

August,  and  that  no  more  of  either  metal  should 
be  coined;  but  the  utmost  efforts  of  a  despotic 
government  to  carry  out  this  fiat  proved  of  no  avail 
whatever.  Gold  and  silver  held  their  own  exactly 
the  same,  and  the  value  of  the  paper  decreased  faster 
than  before.  The  experience  of  one  month  com- 
pelled the  withdrawal  of  the  decree,  and  although 
other  fiat  efforts  were  made,  and  in  the  course  of 
fifteen  months  the  fiat  value  of  gold  was  changed 
twenty-eight  times  and  that  of  silver  twenty-five 
times,  no  real  effect  upon  the  market  value  of  these 
metals  was  produced,  nor  anything  whatever  accom- 
plished in  support  of  the  value  of  the  paper  money. 

91.    THE   COLONIAL  FIAT   MONEY   CRAZE. 

The  colonial  paper  money  story  of  America, 
Massachusetts  in  the  lead,  is  one  of  the  most  dis- 
creditable in  monetary  history.  It  reveals  patriot- 
ism in  alliance  with  financial  crookedness  of  the 
most  unblushing  character.  In  1690  the  General 
Court  of  the  Colony  of  Massachusetts  issued  £40,000 
in  due  bills,  not  legal  tender  and  not  bearing  inter- 
est. It  was  a  dishonest  forced  loan.  The  bills 
were  not  payable  at  any  particular  time,  and  they 
were  receivable  only  for  taxes  and  for  such  com- 
modities as  the  colonial  treasury  might  have  in 
stock.  They  were  issued  in  payment  of  the  wages 
of  soldiers  who  had  served  in  an  expedition  against 
Canada.  The  soldiers  lost  two-fifths  of  their  face 
value,  from  the  cut  rate  at  which  they  had  to  pass 
them.  In  1692,  when  it  was  too  late  to  be  of  any 
benefit  to  the  soldiers,  the  bills  were  made  legal 
tender  in  all  payments,  receivable  for  taxes  at  five 


1  12 


per  cent,  better  than  silver,  and  redeemable  in  sil- 
ver at  the  end  of  twelve  months;  provisions  which 
caused  them  to  pass  at  par  with  silver.  The  doubt- 
ful character  of  even  the  later  form  of  these  prom- 
ises to  pay  was  not  seen.  It  did  not  occur  to  a 
public  without  experience  of  finance,  that  such 
promises  would  prove  worthless  if  they  should  be 
issued  in  excess  of  ability  of  the  treasury  to  take 
care  of  them.  They  were  so  issued  with  reckless 
disregard  of  consequences.  The  success  of  Massa- 
chusetts in  making  paper  pass  at  par  with  silver  in 
1692,  before  experience  had  begun  to  show  how  the 
scheme  would  ultimately  work,  started  throughout 
the  colonies  an  epidemic  of  confidence  in  paper 
money. 

92.    ELEMENTS   OF  THE   DELUSION. 

Even  when  the  intelligent  and  honest  saw  how 
certainly  the  criminal  folly  of  the  scheme  would 
work  disaster  and  dishonor,  they  were  powerless 
to  arrest  the  delusion.  The  ignorant,  the  debtor 
class,  vaguely  counting  partial  escape  from  pay- 
ment of  debt  one  of  their  rights,  and  the  specula- 
tors who  could  profit  by  monetary  disorder,  were  a 
majority  of  the  voters.  The  intellectual  and  moral 
hoodlumism  of  the  movement  for  cheap  money  and 
plenty  of  it,  went  to  the  extreme  of  carrying  laws 
to  compel  owners  of  property  offered  for  sale  to 
accept  paper  the  same  as  silver. 

93.    THE   OUTCOME   OF   FIATIST    FINANCE. 

Those  who  had  been  compelled  to  take  the  paper 
naturally  supported  in  many  cases  efforts  to  make 
it  pass.  But  with  a  great  deal  of  robbery  and  out- 


rage,  of  cruel  wrong  unwittingly  done  and  of 
scoundrelism  rampant,  the  invariable  result,  wher- 
ever paper  money  was  issued,  was  depreciation  and 
loss,  disaster  and  dishonor.  The  bills  of  the  colony 
of  Massachusetts  became  worth  only  one-eleventh 
of  their  face,  and  to  return  to  specie  payments 
Massachusetts  used  the  rascal  method  of  repudiat- 
ing nine-tenths  of  her  outstanding  promises  to  pay. 
The  trouble  was  greatest  in  the  four  colonies  which 
then  constituted  New  England.  Puritan  patriotism 
went  shamelessly  wrong  through  the  craze  of  the 
uninstructed  and  unprincipled  for  cheap  money,  for 
escaping  honest  payment  of  debts,  and  for  making 
gain  by  legal  manipulation  instead  of  by  honest 
labor.  Mr.  Horace  White,  in  a  full  chapter  on  the 
subject,  showing  how  Massachusetts  led  the  way, 
and  how  the  plague  spread  to  the  other  colonies, 
does  not  exaggerate  when  he  says:  "No  kings, 
however  tyrannical,  ever  debased  the  money  in 
circulation  so  recklessly,  persistently,  and  outrage- 
ously, as  the  colonial  assemblies."*  The  cele- 
brated freethinker,  Thomas  Paine,  all  whose  pre- 
judices were  popular  and  patriotic,  said,  in  an  essay 
written  in  1786,  that  "the  concise  history  of  paper 
money  schemes"  would  show  that  they  originated 
with  speculators  planning  some  swindling  opera- 
tion and  debtors  who  hoped  to  cheat  their  creditors. 
One  of  the  uses  to  which  fiat  paper  was  put  was 
that  of  making  loans  to  private  persons,  and  espe- 
cially to  the  land-owners,  who  everywhere  con- 
trolled the  legislative  assemblies,  and  carried  their 

*  Money  and  Banking,  p.  121. 

8 


114 

corrupt  schemes.  The  manifest  shameless  crimi- 
nality thus  introduced  into  political  business 
throughout  the  colonies  provoked  Paine  to  declare 
that  a  man  who  proposed  a  law  of  legal  tender 
ought  to  be  put  to  death. 

94.    FIATIST    ZEAL  FOR  AMERICAN    INDEPENDENCE. 

There  is  no  more  impressively  significant  lesson, 
for  Americans  of  English  descent  to  ponder,  than 
that  of  the  story  of  colonial  bluster  against  English 
effort  to  keep  American  money  sound  and  honest. 
The  colonists  were  not  disposed  to  cease  to  be  Eng- 
lish ;  it  was  to  their  rights  as  Englishmen  that  they 
appealed;  and  foremost  among  those  rights  they 
placed,  and  stoutly  contended  for,  that  of  disastrous 
and  dishonest  issue  of  paper  money.  Nearly  the 
whole  of  the  earlier  quarrel  of  the  colonies  against 
the  mother  country,  for  the  space  of  seventy-five 
years,  was  the  shameless  quarrel  of  the  colonial 
populace  and  demagogues  against  perfectly  just  and 
wise  restraint,  through  the  colonial  governors,  of 
unbridled  license  to  work  iniquity,  not  against  Eng- 
land, but  against  their  own  people ;  the  cruel  iniquity 
of  putting  out  paper  money,  through  the  handling  of 
which  large  numbers  of  the  unscrupulous  and  crafty 
could  unmercifully  rob  those  with  whom  they  had  to 
deal.  It  was  not,  indeed,  American;  the  scoun- 
drelism  was  imported  from  England,  and  much  of 
it  made  a  stern  conscience  of  wild  west  new  world 
Yankeeism,  scorning  to  know  either  instruction  or 
restraint;  the  real  intelligence  and  conscience  of 
the  makers  of  new  commonwealths  were  overborne, 
sometimes  even  dragooned  by  circumstances  into 


figuring  conspicuously  on  the  wrong  side,  or  even 
swept  away  in  the  delusion ;  but  that  large  sense 
of  liberty  and  law  which  was  to  characterize  Ameri- 
can development  of  the  better  and  the  dominant 
type,  would  have  kept  American  money  honest 
and  American  finance  sound.  But  it  was  not  to  be 
until  after  the  Revolution ;  and  after  the  Civil  War ; 
and  after  the  final  education  of  the  American 
masses  to  comprehend  the  wickedness  and  the  folly 
of  fiatist  cut-value  fifty-three-cent  dollars  of  cheap 
silver.  * 

95.    CONTINENTAL  FIATIST  MONEY. 

The  Continental  Congress,  in  respect  of  financial 
matters,  and  most  of  all  in  its  issuing  to  its  own 
people  of  absolutely  worthless  paper  money,  was 
little  better  than  a  den  of  thieves  —  strictly  honor- 
able thieves,  orators  of  lofty  eloquence,  zealots  of 
liberty,  enthusiasts  for  freedom,  and  in  some 
respects  among  the  greatest  men  in  historjr  —  yet 
hardly  less  issuers  of  fraudulent  paper  and  robbers 
of  the  American  people,  to  whom  they  gave  that 
paper  in  payment  of  supplies  for  the  army,  than 
if  they  had  been  a  band  of  counterfeiters.  By  the 
time  Yorktown  was  fought  they  had  justly  earned 
the  detestation  of  their  subjects,  as  much  as  any 
robber  despot  could  have  done,  and  but  for  the 
colossal  honesty  and  discretion  of  George  Wash- 

*  Mr.  Horace  White's  chapter  in  "  Money  and  Banking"  pp.  120- 
134,  on  "  Colonial  Paper  Money,"  goes  more  fully  than  the  above 
summary  account  into  the  facts  of  colonial  kicking  against  the 
pricks  under  the  administration  from  England  of  righteousness  in 
matters  of  money. 


n6 

ington,  they  would  have  wrecked  the  cause  which 
they  undertook  to  direct. 

Mr.  Horace  White  relates,  in  his  chapter  on  "Con- 
tinental Money,"  the  story  of  this  discreditable  and 
disastrous  fiatism,  undertaking  to  make  practically 
worthless  paper  pass  as  money.  After  noting  the 
fact  that  $15,000,000  of  this  continental  currency 
had  been  issued  before  independence  had  been 
declared,  Mr,  White  says: 

"From  this  time  the  demon  of  fiat  money  had 
possession  of  the  country  and  worked  its  will  on 
the  inhabitants.  The  issues  ran  on  in  an  increasing 
volume  till  they  amounted  to  two  hundred  and 
forty-two  million  dollars  in  the  year  1779.  In  1781 
the  whole  mass  became  worthless.  Mr.  Pelatiah 
Webster,  a  merchant  of  Philadelphia  and  an  ardent 
patriot,  wrote  while  the  money  experiment  was 
going  on :  'We  have  suffered  more  from  this  than 
from  every  other  cause  of  calamity ;  it  has  killed 
more  men,  pervaded  and  corrupted  the  choicest 
interests  of  our  country  more,  and  done  more  injus- 
tice than  even  the  arms  and  artifices  of  our  ene- 
mies.' Mr.  Webster,  in  one  of  his  essays,  said  that 
not  more  than  one  man  in  ten  thousand  was  capable 
of  understanding  the  subject.  .  .  .  With  the 
mass  of  the  people  nothing  could  be  done.  All  of 
them,  the  wise  and  the  unwise  together,  were  hur- 
rying to  a  cataclysm.  'The  fatal  error/  says  Web- 
ster, 'that  the  credit  and  currency  of  the  continen- 
tal money  could  be  kept  up  and  supported  by  acts 
of  compulsion  entered  so  deep  into  the  mind  of 
Congress  and  all  departments  of  administration 
through  the  states  that  no  consideration  of  justice, 


it; 

religion,  or  policy,  or  even  experience  of  its  utter 
inefficiency,  could  eradicate  it.  It  seemed  to  be  a 
kind  of  obstinate  delirium,  totally  deaf  to  every 
argument  drawn  from  justice  and  right,  from  its 
natural  tendency  and  mischief,  from  common  sense 
and  even  common  safety.  This  ruinous  principle 
was  continued  in  practice  for  five  successive  years, 
and  appeared  in  all  shapes  and  forms,  that  is,  in 
tender  acts,  in  limitations  of  prices,  in  awful  and 
threatening  declarations,  in  penal  laws  with  dread- 
ful and  ruinous  punishments,  and  in  every  other 
way  that  could  be  devised,  and  all  executed  with  a 
relentless  severity,  by  the  highest  authorities  then 
in  being,  namely,  by  Congress,  by  assemblies  and 
conventions  of  the  states,  by  committees  of  inspec- 
tion (whose  powers  in  those  days  were  nearly  sov- 
ereign), and  even  by  military  forces ;  and  though 
men  of  all  descriptions  stood  trembling  before  this 
monster  of  force  without  daring  to  lift  a  hand 
against  it  during  all  this  period,  yet  its  unrestrained 
energy  ever  proved  ineffectual  to  its  purposes,  but 
in  every  instance  increased  the  evils  it  was  designed 
to  remedy  and  destroyed  the  benefits  it  was  intended 
to  promote.  Many  thousand  families  of  full  and 
easy  fortune  were  ruined  by  these  fatal  measures 
and  lie  in  ruins  to  this  day,  without  the  least  bene- 
fit to  the  country  or  to  the  great  and  noble  cause  in 
which  we  were  then  engaged. ' ' 

"Judge  Story,"  says  Mr.  White,  "referring  to 
the  Revolutionary  and  post-Revolutionary  legal 
tender  laws,  says :  'They  entailed  the  most  enorm- 
ous evils  on  the  country  and  introduced  a  system 
of  fraud,  chicanery  and  profligacy  which  destroyed 


all  private  confidence  and  all  industry  and  enter- 
prise.'  ' 

The  excessive  fanaticism  into  which  zeal  for  lib- 
erty is  easily  betrayed  had  the  effect  then,  as  it 
still  has  the  effect,  of  making  men  blind,  not  only 
to  the  dictates  of  sound  policy  but  to  the  demands 
of  common  honesty. 

96.   THE   CIVIL  WAR  "  GREENBACK"    FIATISM. 

In  a  further  chapter  on  "The  Greenbacks,"  Mr. 
White  shows  by  an  unanswerable  statement  of 
facts  how  the  issue  of  legal  tender  notes,  and  of 
the  treasury  notes  known  as  Greenbacks,  was  an 
altogether  discreditable  and  disastrous  resort  to 
fiatism,  when  the  only  honest  and  rational  method 
of  meeting  the  expenses  of  the  government,  even 
in  the  greatest  crisis,  was  that  of  taxation  and  of 
borrowing  upon  the  security  of  bonds. 

The  financial  incompetence  of  Secretary  Chase, 
of  the  Treasury  Department,  together  with  the 
personal  credit  which  his  commanding  intellect  and 
high  character  gave  him,  were  in  large  part,  as  Mr. 
White  shows,  responsible  for  the  wretched  fashion 
in  which,  by  fiatism  of  the  most  illegitimate  char- 
acter, the  nation's  finances  were  mismanaged.  Mr. 
E.  G.  Spalding,  of  Buffalo,  a  successful  banker,  Mr. 
Samuel  Hooper,  an  eminent  merchant  of  Boston, 
and  Thaddeus  Stevens,  of  Pennsylvania,  chairman 
of  the  committee  of  ways  and  means  and  leader  in 
the  lower  house  of  Congress,  assisted  to  give  char- 
acter to  a  scheme  which  the  great  representatives 
of  American  banking  interests  and  the  chief  repre- 
sentatives of  American  finance  remonstrated 


against.  The  plan  urged  by  the  bankers  for  bor- 
rowing honestly  in  the  money  market  by  the  sale 
of  bonds  for  what  they  would  bring  was  violently 
objected  to  by  Mr.  Spalding  as  likely  to  knock  down 
government  stocks  to  seventy-five  or  even  sixty 
cents  on  the  dollar,  but  under  the  plan  adopted  to 
carry  out  Mr.  Spalding's  views,  the  government 
paper  went  down  to  forty  cents  on  the  dollar,  and 
the  creditors  of  the  government,  including  the  sol- 
diers and  the  laboring  men,  were  incidentally 
cheated  out  of  more  than  half  their  dues. 

The  whole  scheme,  as  Mr.  White  shows,  added 
$870,000,000  to  the  cost  of  the  war.  As  Mr.  White 
unanswerably  demonstrates,  the  large  general  way 
in  which  Secretary  Chase  commanded  the  confi- 
dence of  the  country  and  the  effort  which  he  made 
to  carry  his  head  high  and  not  let  the  United  States 
appear  as  a  borrower  selling  bonds  below  par, 
worked  most  disastrously  for  the  national  finances. 

97.    THE   COSTS   OF  AMERICAN   FIATISM. 

However  great  our  country,  and  however  excel- 
lent the  motives  governing  our  statesmen,  we  are 
punished  none  the  less  severely  for  whatever  finan- 
cial mistakes  we  make.  Benjamin  Franklin,  the 
wisest  man  of  the  colonial  times,  and  especially 
notable  in  history  as  a  laboring  man  who,  by  self- 
education  and  genius  rose  to  the  highest  distinction, 
both  in  statesmanship  and  in  science,  urgently 
advised  against  continental  paper  money  without 
any  security  for  the  payment  of  the  interest  at  least 
in  "hard  dollars."  The  patriot  Congress  voted 
that  it  was  impracticable,  but  in  this  they  were 


120 

grievously  mistaken.  The  determination  to  pay 
in  honest  hard  dollars  may  not  go  very  far  at  the 
time  in  getting  the  dollars,  but  it  goes  much  farther 
than  fiat  issue  of  paper,  and  it  secures  credit  for 
borrowing  upon  terms  much  better  than  those  to 
which  we  have  always  had  to  come  after  resort  to 
fiatism.  It  may  be  set  down  as  be)Tond  doubt  that 
the  United  States,  taking  the  colonial  times  with 
our  own  times,  have  fooled  away,  by  resort  to  fiat- 
ism  with  its  inevitable  and  invariable  failure,  not 
less  than  $1,000,000,000.  The  fact  that  we  have 
been  a  great  country,  and  are  on  the  wa}*-  to  become 
the  greatest  of  countries,  and  that  the  average  of 
intelligence  and  character  in  our  people  is  higher 
than  anywhere  else  in  the  world,  cannot  in  the  least 
save  us  from  the  discredit  and  dishonor,  the  disas- 
ter and  destruction  of  national  interests,  which  are 
the  inevitable  result  of  any  fiatism  whatever,  by 
which  it  is  attempted  to  make  a  paper  or  other  sub- 
stitute for  honest  hard  dollars. 


CHAPTER  IX. 

BIMETALLISM. 
98.    "  WHAT   IS   BIMETALLISM?" 

A  public  journal  of  July  17,  1895,  had  the  follow- 
ing under  the  head  of  "Meaning  of  Bimetallism." 

"In  the  agitation  going  on  over  the  financial 
question  it  is  time  that,  if  possible,  some  authority 
should  establish  the  meaning  of  the  much-used 
word,  'bimetallism/ 


121 

"In  a  volume  recently  published  by  Mr.  Muhle- 
man,  deputy  assistant  treasurer  of  the  United 
States,  entitled  'Monetary  Systems  of  the  World,' 
the  author  gives  the  following  definition:  'By 
bimetallism,  strictly  defined,  is  meant  the  free  and 
unlimited  coinage  of  both  gold  and  silver  into  coins 
of  full  debt-paying  power.  Not  the  mere  use  of 
the  double  standard,  but  the  actually  open  mints 
on  the  terms  given  above.  No  country  in  the 
world  is,  therefore,  bimetallic  to-day,  since  those 
conditions  do  not  exist  anywhere. '  Other  authori- 
ties just  as  competent  as  Mr.  Muhleman  define 
bimetallism  as  'the  concurrent  circulation  of  gold 
and  silver  coins  at  a  fixed  ratio. ' 

"It  is  absurd  to  hold  that  'bimetallism'  and  'free 
silver-coinage'  are  synonymous.  The  report  of  the 
director  of  the  mint  gives  the  following  as  the 
bimetallic  countries:  United  States,  France,  Bel- 
gium, Roumania,  Netherlands,  Turkey,  Japan,  the 
Straits  Settlements  and  Cuba.  When  two  govern- 
ment officials  like  the  director  of  the  mint  and  the 
deputy  assistant  treasurer  disagree  as  to  the  mean- 
ing of  a  word,  to  such  an  extent,  it  is  time  for  its 
meaning  to  be  fixed  by  some  competent  authority. ' ' 

The  difficulty  with  the  whole  subject  grows  out 
of  the  fact  that  no  proper  study  of  the  history  is 
made  the  basis  of  the  explanations  offered.  Such 
study  would  show  very  clearly  that  historic  bimet- 
allism had  no  theoretical  ground,  that  it  was  an 
effort  to  have  both  gold  and  silver  money  together, 
and  that  it  adopted  one  or  another  plan  to  secure 
this,  as  very  imperfect  knowledge  suggested,  and 
got  upon  the  ground  of  the  double  standard,  free 


122 

coinage,  and  equal  legal  tender  of  both  gold  and 
silver,  because  the  bad  finance  involved  was  not 
yet  understood. 

99.    SIDNEY  SHERWOOD  ON  BIMETALLISM. 

Sidney  Sherwood,  in  the  eleventh  of  his  lectures 
-on  "The  History  and  Theory  of  Money,"  says: 

"What  is  bimetallism?  It  is  the  policy  of  using 
both  gold  and  silver  as  money,  the  mints  being 
open  to  the  free  coinage  of  both  of  these  metals, 
and  both  kinds  of  money  being  full  legal  tender. 
There  is  also  this  requisite,  that  by  law  there  shall 
be  a  fixed  ratio  between  the  units  of  these  two 
coinages.  All  of  these  elements  are  necessary  to 
real  bimetallism.  Hence  the  situation  in  the  Uni- 
ted States  to-day,  in  which  there  is  free  coinage  of 
one  metal  (gold)  and  not  free  coinage  of  the  other, 
is  not  bimetallism,  although  both  moneys  are  made 
full  legal  tender." 

The  supreme  fact  of  the  history,  an  attempt  to 
have  both  gold  and  silver  money,  making  bimet- 
allism of  money,  is  left  out  of  view  in  the  above 
statement.  Prof.  Sherwood's  view  of  the  matter 
rests  entirely  on  the  assumption  that  the  bimet- 
allism of  the  past,  on  the  old  bad  plan  of  two  kinds 
of  standard  money,  both  gold  and  silver,  is  the 
only  possible  bimetallism.  This  is  an  assumption 
which  has  been  naturally  made,  but  without  suffi- 
cient study  of  the  subject,  and  with  much  more 
than  a  chance  that  the  progress  of  education  in 
economics  will  open  an  entirely  different  view,  and 
permit  advocacy  of  another  kind  of  bimetallism. 
It  is,  however,  beyond  all  doubt  that  the  bimet- 


123 

allism  of  the  past,  gold  and  silver  yoked  together 
to  make  a  double  standard,  could  not  survive  the 
revelations  of  modern  economic  science. 

100.   SHAW   ON   BIMETALLISM. 

Mr.  W.  A.  Shaw,  in  his  "History  of  Currency  — 
1252  to  1894"  has  the  following  remarks  in  his 
Preface : 

"The  total  omission  of  the  historic,  reasoned, 
and  consecutive  study  of  currency  history  —  the 
most  important  domain  of  practical  economics  — 
from  the  curriculum  of  every  university  in  the 
land,  is  matter  for  surprise  and  regret,  and  can 
only  be  attributed  to  the  lack  of  an  initiative  and 
of  a  handbook." 

' '  The  verdict  of  history  on  the  great  problem  of 
the  nineteenth  century  —  bimetallism  —  is  clear, 
and  crushing,  and  final ;  and  against  the  evidence 
of  history  no  gainsaying  of  theory  ought  for  a 
moment  to  stand." 

"Throughout  mediaeval  Europe  and  up  to  the 
close  of  the  eighteenth  century,  the  currency  of 
Europe  was  practically  bimetallic." 

' '  The  conception  of  a  law  of  tender  is  quite  mod- 
ern. And  the  evolution  of  the  idea  of  such  a  law 
has  gone  hand  in  hand  with  the  evolution  of  a  con- 
ception of  monetary  theory  on  the  part  of  the 
legislator.  .  .  .  From  the  thirteenth  to  the 
eighteenth  century,  both  gold  and  silver  had  been 
actually  employed  in  European  commerce  without 
any  idea  either  of  declaring  or  of  restricting  the 
tender,  whether  of  the  one  or  of  the  other." 

"The  final  outcome  of  the  application  of  the  law 


124 

of  tender  was  the  development  of  the  modern 
monometallic  system.  It  was  only  at  the  close  of 
the  eighteenth  century  that  England  evolved  this 
system  and  flung  away  the  last  remains  of  that 
mediaeval  ignorance  which  had  brought  with  it 
such  a  dower  of  mishap.  France  has  taken  almost 
a  century  of  further  experience  before  arriving  at 
the  same  point  of  development. ' ' 

"The  modern  theory  of  bimetallism  is  almost  the 
only  instance  in  history  of  a  theory  growing  not 
out  of  practice,  but  out  of  the  failure  of  practice ; 
resting  not  on  data  verified,  but  on  data  falsified 
and  censure-marked.  No  words  can  be  too  strong 
of  condemnation  for  the  theorizing  of  the  bimet- 
allist  who,  by  sheer  imaginings,  tries  to  justify 
theoretically  what  has  failed  in  five  centuries  of 
history  and  to  expound  theoretically  what  has 
proved  itself  incapable  of  solution  save  by  cutting 
and  casting  away. ' ' 

"Such  a  verdict  as  this  of  history,  negative  as  it 
is,  must  strike  many  a  serious  mind  with  dismay. 
The  following  of  bimetallism  would  not  be  what  it 
is  were  it  not  for  the  despair  of  any  other  remedy- 
for  the  situation  at  the  moment. ' ' 

101.    ERROR   OF   MR.    SHAW'S  ASSUMPTION. 

Mr.  Shaw's  account  is  that  of  one  of  the  greatest 
living  authorities  upon  the  history  of  money,  and 
his  judgment  in  condemnation  of  bimetallism  of 
the  standard  is  just  beyond  all  possibility  of  appeal ; 
but  that  does  not  make  it  less  to  be  regretted  that 
his  statement  proceeds  upon  the  wholly  unneces- 
sary assumption  that  bimetallism  can  only  mean, 


125 

and  has  first  of  all  historically  meant,  the  old  bad 
plan  of  having  gold  and  silver,  or  silver  and  gold, 
not  only  go  together  as  money,  but  each  figure  as 
standard  money  with  equal  tender,  under  a  valua- 
tion of  coins  fixed  by  law.  It  has  been  natural  for 
many  persons  not  well  studied  in  so  large  and  so 
difficult  a  subject,  to  think  it  possible  to  make  the 
old  bad  plan  of  a  double  standard  work  well  by 
some  method  of  new  regulation.  Every  such 
thought  can  only  prove  useless  and  fatal,  yet  there 
is  no  need  of  construing  this  as  condemnation  of 
all  bimetallism.  There  may  be  a  bimetallism  of 
money,  without  a  bimetallism  of  the  standard,  gold 
and  silver  united  in  use  without  the  old  bad  plan 
of  trying  to  have  the  parity  of  the  silver  with  the 
gold  as  a  standard  maintained.  What  intelligence 
and  experience  now  thoroughly  understand  is,  that 
a  double  standard  is  a  delusion  and  a  snare.  But 
it  does  not  follow  that  we  may  not  have  both  gold 
and  silver  money,  and  make  the  most  of  each  of 
our  precious  metals.  Nor  does  it  permit  us  to  read 
the  past  as  chiefly  devoted  to  bimetallism  of  the 
standard.  It  was  chiefly  devoted  to  bimetallism  of 
money,  and  adopted  the  double  standard  system  as 
a  supposed  necessity  of  use  together  of  both  gold 
and  silver. 

102.    CONFUSION  OF  POINTS   OF  VIEW. 

Current  discussion  on  both  sides  of  the  dispute 
is  commonly  wrong  as  to  the  point  of  view,  with 
the  double  result  that  the  money  bimetallists  are 
accused  of  straddling,  or  are  induced  to  think  well 
of  international  effort  to  restore  the  double  stan- 


126 

dard  system,  and  the  silverites  are  betrayed  into 
an  entirely  false  position,  that  of  suicidal  denial  of 
the  standard  which  is  in  the  nature  of  things  the 
only  sound  and  true  and  honest  standard.  If 
the  former  could  explain  just  how  they  lean  to 
silver,  and  if  the  silverites  could  understand 
themselves  as  friends  of  silver,  the  dispute  would 
disappear. 

The  confusion  turns  upon  a  double  meaning  of 
"bimetallism."  The  bimetallism  of  money  is  one 
thing,  and  it  is  the  thing  upon  which  all  would 
unite  if  the  whole  matter  were  seen  in  a  clear 
light.  The  bimetallism  of  the  standard  is  another 
thing,  an  impossible  thing,  as  well  as  a  pro- 
foundly bad  thing,  which  the  silverites  them- 
selves should  be  the  last  to  advocate,  because  of 
the  injury  to  silver,  as  well  as  to  other  interests, 
which  it  will  work.  The  definitions  commonly 
given  make  the  great  mistake  of  losing  sight  of 
bimetallism  of  money.  Thus  Mr.  Preston,  director 
of  the  mint,  says  that  bimetallism  means  "the 
unlimited  coinage  of  both  gold  and  silver  into  full 
legal  tender  coins."  But  this  is  bimetallism  of  the 
standard,  monometallism  of  which  does  not  exclude 
bimetallism  of  money.  Gold  monometallism  of  the 
standard,  with  gold  and  silver  bimetallism  of 
money,  is  the  true  point  of  view.  This  means  gold 
coined  at  its  supposed  intrinsic  value,  and  current 
as  standard  money,  and  silver  coined  in  the  ratio  to 
gold  most  secure  and  most  helpful  to  silver  and 
to  general,  popular  money  interests,  and  current 
on  a  fiat  parity  with  gold,  or  exchangeable  for 
gold. 


127 

103.  GOLD  STANDARD  BIMETALLISM. 

The  bimetallism  thus  secured  would  be  gold 
bimetallism  —  gold  as  to  the  standard,  and  gold 
and  silver  as  to  the  money  in  use.  There  could  be 
a  silver  bimetallism,  with  silver  as  the  standard 
and  gold  dealt  with  as  secondary,  precisely  as  we 
explain  for  silver ;  and  with  great  shortage  of  gold 
such  a  system  might  be  necessary;  but  no  other 
bimetallism  is  workable  in  practice  or  sound  in 
theory  than  that  which  chooses  one  of  the  two 
metals  as  standard.  "All  experience  has  shown 
that  you  must  have  one  standard  coin,  which  shall 
be  a  legal  tender  for  all  others,  and  then  you  may 
promote  your  domestic  convenience  by  having  a 
subsidiary  coinage  of  silver,  which  shall  circulate 
in  all  parts  of  your  country  as  legal  tender  for  a 
limited  amount,  and  be  redeemable  at  its  face  value 
by  your  government."  —  William  D.  Kelley  in 
Congress,  April  9,  1872.  Neither  the  United  States 
alone  nor  all  nations  together  could  maintain 
bimetallism  of  the  standard;  and  looking  in  that 
direction  would  not  be  thought  of  by  either  party 
if  the  distinction  between  bimetallism  of  the  stan- 
dard and  bimetallism  of  money  had  been  properly 
understood. 

Real  parity  of  standards  has  been  found  by  ages 
of  experience  impossible  of  maintenance,  because 
value  in  the  market  never  can  be  depended  upon 
to  remain  where  real  parity  requires,  and  the 
moment  that  one  of  the  two  metals  is  at  a  market 
price  below  the  other  the  money-mongers  use  it  to 
buy  up  the  other  for  the  sake  of  what  they  can 
make  by  selling  the  other  as  metal.  The  fine  work 


128 

of  the  robber  gold  men  is  got  in  with  every  change 
in  the  value  of  either  of  two  standard  metals  which 
makes  one  of  them  intrinsically  worth  more  than 
the  other,  and  the  only  way  to  make  an  end  of  the 
plague  is  that  of  making  one  of  the  metals  the 
standard  and  giving  the  other  a  parity  with  it, 
which  is  just  enough  fiat  parity  to  make  the  two 
work  together  both  securely  and  helpfully. 

104.    SECURE   RATIO   FOR   SILVER. 

The  most  secure  ratio  between  gold  and  silver 
means  intrinsic  value  in  the  silver  coin  enough  less 
than  its  face  value  to  leave  no  chance  of  rise  in  the 
market  value  of  silver  making  the  coin  worth  more 
as  metal  than  as  money.  Its  parity  with  gold 
should  be  fiat  parity  to  the  small  extent,  say  seven 
per  cent.,  necessary  to  avoid  the  risk  of  giving  the 
money-mongers  a  chance  to  make  a  profit  by 
exchanging  it  for  gold  and  selling  it  at  a  profit  as 
metal. 

On  the  other  hand,  the  ratio  most  helpful  to  sil- 
ver and  to  general  popular  money  interests  will  be 
that  of  intrinsic  value  in  the  silver  coin  as  large  as 
may  be  consistent  with  security  of  the  coin  as 
money  —  the  security  against  being  taken  out  of 
circulation  and  sold  as  metal  by  the  money-mon- 
gers. It  is  really  a  question  for  mint  experts 
exactly  what  part  of  a  silver  coin,  under  the  princi- 
ples here  explained,  should  be  intrinsic  value  in 
silver.  We  may  suppose  it  to  be  ninety-three  per 
cent.,  or  about  forty  per  cent,  more  than  that  of 
our  present  silver  dollar.  This  amount  of  silver  in 
the  coin  will  make  the  largest  practicable  use  of 


I29 

silver,  and  it  will  at  the  same  time  permit  the 
amplest  desirable  supply  of  silver  money,  with 
the  least  dependence  on  fiat  value  in  it,  and  thus  the 
least  peril  to  national  credit.  If  our  present  silver 
money  had  been  thirty-five  or  forty  per  cent,  richer 
in  silver  than  it  is,  the  amount  of  silver  used  would 
have  been  that  much  larger  and  the  money  itself 
that  much  less  dependent  on  fiatism,  and  thus  our 
credit  more  secure,  and  business  and  prosperity 
not  only  undisturbed,  but  booming,  full  and  strong 
against  all  the  world. 

105.    THE  TRUE   BIMETALLIC   INTEREST. 

The  facts  which  have  been  given  make  plain  the 
justice  of  a  desire  for  bimetallism,  and  even  lean- 
ing to  silver,  only  it  is  bimetallism  of  money,  not 
of  the  standard,  and  gold  bimetallism,  or  gold  the 
standard,  and  silver  established  as  near  to  gold  as 
security  of  its  position  will  permit,  with  fiat  parity 
to  make  it  "as  good  as  gold"  in  the  money  market 
and  in  the  labor  market.  There  is  no  opposition 
of  interest  between  the  money  market  and  the 
labor  market  in  the  matter  of  the  character  of 
money,  except  that  labor  suffers  the  most,  and 
money-mongers,  by  their  craft  and  tricks,  get  the 
most  advantage,  when  money  is  not  good  and 
credit  is  not  secure.  What  labor  wants  as  against 
capital  is  a  larger  share,  but  it  wants  that  share 
good,  and  has  more  interest  than  the  money -mon- 
gers have  to  keep  it  steadily  good. 
9 


1 3o 

IO6.   GOLD   CANNOT   DISPLACE   SILVER. 

There  is  no  truth  whatever  in  the  complaint  of 
denial  under  the  gold  standard  of  a  place  for  silver 
in  the  money  of  mankind,  and  dangerous  depen- 
dence everywhere  upon  gold  only  for  money.  The 
nations  of  progress,  of  wealth,  and  of  commerce, 
in  whose  affairs  gold  as  money,  and  as  a  standard, 
is  a  recognized  necessity,  constitute  the  minority 
only  of  mankind.  Even  their  use  of  the  gold  stan- 
dard operates  to  secure  the  large  use  of  silver  along 
with  gold ;  and  the  contention  is  a  just  one  that 
even  if  the  gold  standard  were  accepted  every- 
where, and  gold  money  brought  into  use,  it  would 
operate  to  make  more  rather  than  less  secure  the 
large  use  of  silver. 

lO/.    ADVANTAGE   ENJOYED   BY   SILVER. 

Silver  enjoys  the  advantage  of  being  the  familiar 
and  the  necessary  money  of  the  majority  of  the 
human  race,  the  hundreds  of  millions  who  inhabit 
India  and  China,  and  other  parts  of  the  eastern  and 
tropical  regions,  where  nearly  all  transactions 
require  small  money.  Even  in  England  monetary 
distress  of  the  common  people  has  in  times  past 
turned  upon  the  want  of  silver  small  coins  in  which 
to  make  change ;  and  what  gave  silver  so  long  and 
in  so  many  nations  the  rank  of  a  standard  was  the 
fact  that  it  was  so  generally  the  necessary  money 
of  the  common  people.  Silver  had  the  lead  on  this 
account,  and  would  have  kept  it  but  for  its  more 
and  more  failing  to  give  the  service  which  it  was 
depended  upon  for. 


IO8.    HOW   SILVER   LOST   FIRST  PLACE. 

As  numbers  of  persons  came  to  require  large 
sums  to  be  frequently  handled,  the  bulk  and  weight 
of  considerable  amounts  were  found  terribly  objec- 
tionable ;  and  if  the  market  price  of  silver  made  the 
coins  worth  more  than  their  face,  the  money-mon- 
gers took  all  of  them,  and  none  were  available  as 
money.  If,  moreover,  silver  stood  as  standard  and 
tender  money,  and  its  value  fell  to  any  extent,  as 
in  times  of  large  development  and  very  great  pro- 
gress it  shows  a  tendency  to  do,  it  would  fail  of  one 
of  its  most  important  uses,  that  of  applying  at  the 
payment  of  a  debt  the  same  as  at  its  creation,  and 
would  enable  all  persons  under  promise  or  contract 
to  pay  to  make  their  payments  by  tender  of  less 
than  "value  received." 


109.    GOLD   STANDARD   WILL  HELP   SILVER. 

The  gold  standard  system  not  only  gives  gold 
where  it  is  a  necessity,  but  prevents  the  silver 
money  from  going  out  of  service  as  money,  or 
doing  by  its  fall  in  value  false  work  as  a  standard 
equall)'  applicable  to  the  creation  and  to  the  pay- 
ment of  debts  ;  and  as  in  all  countries  there  is  an 
immense  need  of  money  of  the  common  people, 
part  of  which  at  least  may  be  silver  dollars,  and  a 
large  part  of  which,  for  smaller  change,  must  be 
silver  ;  and  as  vast  regions  of  the  globe,  embracing 
a  majority  of  mankind,  chiefly  use  silver  as  money, 
there  is  no  possibility  of  a  lessened  world-use  of 
silver  as  money.  There  is,  in  fact,  a  very  great 
probability  of  the  increased  dependence  of  the 


132 

whole  world  upon  silver  money.  Let  it  be  once 
understood  that  this  use  is  to  be  under  the  gold 
standard,  and  international  agreements  for  it  will 
be  at  once  practicable,  the  effect  of  which  will  be 
to  carry  gold  bimetallism  everywhere,  and  to 
largely  increase  the  amount  of  silver  coined  and 
current  as  money ;  coined  at  the  best  advantage  to 
silver  and  current  at  the  best  advantage  to  the  pub- 
lic. Mr.  Jevons  put  the  case  fairly  well  when  he 
said: 

"The  highly-civilized  and  advancing  nations  of 
Western  Europe  and  North  America,  including 
also  the  rising  states  of  Australasia,  and  some  of 
the  better  second-rate  states,  such  as  Egypt,  Brazil, 
and  Japan,  will  all  have  the  gold  standard.  The 
silver  standard,  on  the  other  hand,  will  probably 
long  be  maintained  throughout  the  Russian  empire 
and  most  parts  of  the  vast  continent  of  Asia ;  also 
in  some  parts  of  Africa,  and  possibly  in  Mexico. 
Excluding,  however,  these  minor  and  doubtful 
cases,  Asia  and  Russia  seem  likely  to  uphold  silver 
against  the  rest  of  the  world  adopting  gold."* 


*  Money  and  the  Mechanism  of  Exchange ',  p.  149. 

India  and  Russia  have  gone  to  the  gold  standard  since  Jevons 
wrote,  and  China  even  uses  that  standard  to  measure  the  value, 
day  by  day,  of  the  silver  she  uses. 


133 


CHAPTER  X. 

BIMETALLISM  IN  ENGLAND:  COMPLETE  BREAK- 
DOWN OF  THE  DOUBLE  STANDARD  SYSTEM. 

IIO.    EARLY   ENGLISH    SILVER. 

In  England  silver  was  the  only  metal  coined  from 
the  time  of  Egbert  to  that  of  Edward  III.,  unless, 
perhaps,  a  very  few  small  pieces  of  gold.  Silver 
was  the  sole  legal  tender  and  measure  of  value,  and 
few  coins  were  issued  except  silver  pennies.  These 
silver  pennies,  equal  probably  in  purchasing  power 
to  a  shilling  at  least,  and  perhaps  sixteen  pence,  of 
the  present  English  money,  formed  the  mass  of 
the  currency.  Good  gold  coin  came  from  Florence 
under  the  name  of  florins,  and  from  far  off  Byzan- 
tium (Constantinople),  under  the  name  of  byzants. 
Tradesmen,  moreover,  put  out  copper  coins,  which 
the  people  gladly  used  as  small  money.  No  legiti- 
mate coinage  of  copper  existed  before  1664. 

III.   EARLY   ENGLISH    GOLD. 

The  use  of  foreign  gold  led  to  English  coinage 
of  gold.  The  Plantagenet  kings,  for  example, 
finding  that  under  exclusive  coinage  of  silver  the 
people  used  gold  money  from  abroad,  eventually 
undertook  the  issue  of  gold  coins,  at  a  fixed  ratio 
of  exchange  with  silver.  This  made  the  English 
system  a  double  standard  system,  and  from  1257  to 
1664  England  had  both  silver  money  and  gold 
money,  under  a  ratio  of  exchange  which  was  fixed 
from  time  to  time  by  royal  proclamation.  From 


134 

1664  to  1717  no  proclamations  were  made,  and  the 
value  of  gold  was  variously  reckoned  in  terms  of 
the  silver  shilling ;  making  a  silver  standard  sys- 
tem. But  the  system  worked  badly.  Under  Charles 
II.  and  James  II.,  from  1661  to  1690,  there  was  no 
end  of  trouble  to  have  money  in  England.  The 
good  coins  were  exported  because,  the  face  value 
being  lower  than  the  real  value,  they  were  worth 
more  to  sell  abroad  than  to  circulate  at  home,  and 
hardly  anything  was  in  circulation  except  depreci- 
ated, scarcely  half  value,  silver,  and  iron,  brass,  or 
copper  pieces  plated  with  silver. 

112.    RECOINAGE   SCHEME    1695-99. 

In  1695,  November  22,  under  William  II.,  an  Act 
for  remedying  the  ill  state  of  the  coins  was  passed, 
but  with  the  unwise  determination  to  adhere  to 
the  pre-existing  standard,  in  spite  of  the  clearly 
seen  advance  in  the  value  of  silver,  which  made 
the  coins  worth  more  as  metal  than  as  money.  The 
arguments  of  the  celebrated  John  Locke  were 
accepted  and  acted  on,  in  spite  of  replies  to  them 
which  ought  to  have  been  seen  to  be  absolutely 
decisive.  A  great  recoinage  scheme,  carried  out  in 
the  years  1695-99,  had  the  result  of  bringing  in  a 
great  quantity  of  gold,  but  the  gain  of  gold  meant 
the  loss  of  silver.  The  movement  either  way,  of 
gold  into  England  and  of  silver  out  of  England, 
was  due  to  the  fact  that  the  gold  coin  were  accepted 
in  England  at  more  than  their  real  value  and  the 
silver  coins  at  less.  Even  a  premium  of  2  1-2  pence 
per  ounce  on  foreign  silver  coins  brought  to  the 


135 

mint,  between  April  17  and  December  i,  1709,  did 
no  good,  because  it  still  left  silver  worth  more  else- 
where than  in  England. 

113.    THE   MONEY-MONGERS   GOT  THE   SILVER. 

It  was  remarked  in  Parliament  *  that  the  situa- 
tion had  occasioned  "a  clandestine  trade,  of  late 
years  carried  on  by  the  Dutch,  Hamburgers  and 
other  foreigners,  in  concert  with  the  Jews  and 
other  traders  here  (in  London),  which  consisted  in 
exporting  silver  coins  and  importing  gold  in  lieu 
thereof;  which  being  coined  into  guineas  at  the 
Tower  (the  government  mint  at  the  Tower),  near 
fifteen  pence  was  got  by  every  guinea,  which 
amounted  to  about  five  per  cent. ;  and  as  these 
returns  might  be  made  five  or  six  times  in  a  year, 
considerable  sums  were  got  by  it,  to  the  prejudice 
of  Great  Britain,  which  thereby  was  drained  of 
silver  and  overstocked  with  gold.f 

114.    SIR  ISAAC   NEWTON   ON   MONEY. 

The  celebrated  Sir  Isaac  Newton  was  master  of 
the  mint  in  England,  and  in  1717,  some  months 
earlier  than  the  just  mentioned  speech  in  Parlia- 
ment, he  had  made  a  report  showing  very  plainly 
the  effect  of  overvaluing  or  undervaluing  gold  or 
silver,  causing  the  overvalued  to  come  in  and  the 
undervalued  to  go  out  through  the  inevitable  trade 
in  money  which  the  situation  stimulated.  In 
another  report  of  September  2ist,  Newton  stated 

*Dec.  20,  1717. 

-f-Shaw;  Hist,  of  Currency,  p.  228. 


136 

that,  since  the  beginning  of  1702  to  September, 
1717,  the  gold  coined  at  the  mint  had  amounted  to 
7, 127,835  pounds  sterling,  while  the  silver  within  the 
same  period  had  only  amounted  to  223,380  pounds. 
To  meet  the  situation  Parliament  petitioned  the 
king  to  have  the  value  of  the  guinea  reduced  to  21 
shillings,  instead  of  2 is.  6d.,  and  this  was  at  once 
done  by  proclamation  December  22.  Even  this  was 
not  a  complete  cure.  The  evil  lasted  for  half  a 
century,  and  might  have  lasted  still  longer  but  for 
the  rise  in  the  value  of  gold  which  began  about 
1756,  and  by  1773  had  made  gold  worth  what  it  was 
counted  as  worth. 

115.    ENGLAND   WITH   NO   GOOD   MONEY. 

The  change  that  gave  England  gold  did  not  after 
all  keep  it  in  circulation  as  money.  There  very 
soon  took  effect  another  tendency  created  by  the 
situation,  that  of  export  of  gold  to  Holland  to  be 
filed  and  sent  back  in  a  depreciated  form.  The 
silver  was  so  poor,  so  depreciated,  that  depreciated 
gold  could  be  made  to  pass  with  it.  Mr.  Shaw 
remarks  on  this  phenomenon,  which  he  says 
"always  recurs  in  a  currency  containing  two  differ- 
ently depreciated  elements : ' ' 

"The  idea  that  bimetallic  action  replaces  one 
good  metal  by  another,  a  good  undepreciated  coin- 
age of  silver  for  a  good  undepreciated  coinage  of 
gold,  or  vice  versa,  is  not  borne  out  by  a  single 
instance  in  history.  Bimetallic  action  always  sub- 
stitutes the  less  for  the  greater,  the  more  depreci- 
ated for  the  less,  or  the  depreciated  for  the  perfect 
standard  coin.  .  .  .  The  result  of  fifty  years  of 


137 

bimetallic  regime  left  England  with  currency 
depreciated  in  both  its  limbs,  in  both  silver  and 
gold,  and  as  deficient  in  the  quantity  current  as  in 
the  weight  of  the  individual  pieces.* 

Il6.    BIRTH    OF   THE   PRESENT   ENGLISH   SYSTEM. 

It  was  at  this  stage  of  English  experience  that 
Lord  Liverpool  intervened  with  those  enlightened 
views  which  operated  to  create  the  present  English 
system  of  stable  finance.  Under  his  advice,  and 
by  resolutions  of  the  House  of  Commons  passed 
May  10,  1774,  all  the  deficient  gold  coins  were 
called  in  and  recoined,  and  the  sound  rule  of  good 
standard  money  was  made  that  in  future  the  cur- 
rency of  the  gold  coin  should  be  regulated  by 
weight  as  well  as  by  tale  or  count,  and  that  the 
several  pieces  should  not  be  legal  tender  if  dimin- 
ished below  a  certain  weight.  This  not  only 
brought  the  gold  coins  to  a  state  of  comparative 
perfection,  but  kept  them  there. 

117.    A   LAW   OF   TENDER  APPLIED   TO   SILVER. 

To  mend  the  case  of  silver  an  Act  was  passed  in 
the  fourteenth  year  of  George  III.  prohibiting,  on 
pain  of  confiscation,  the  importation  of  light  silver 
coin,  and  requiring  that  for  payment  of  any  sum 
exceeding  £25,  at  any  one  time,  silver  should  be 
legal  tender  by  weight  only  at  the  rate  of  55.  2d. 
per  ounce  of  silver.  Mr.  Shaw  says  of  this  last 
provision  of  English  law  dating  from  1774: 

"The  importance    of  this  latter  epoch-making 

*  Hist,  of  Currency,  pp.  232,  233. 


I38 

clause  is  vital.  It  is  the  first  enactment  of  a  law  of 
tender  in  the  history  of  English  monetary  legisla- 
tion, and  it  was  the  first  step  towards  the  shaking 
off  the  incubus  of  that  mediaeval  currency  system 
which  was  even  then  only  coming  to  be  understood 
in  all  its  fatal  perniciousness.  For  statesmanship, 
the  only  parallel  to  it  is  that  Act  of  Henry  III.  of 
France,  which  proved  so  short  lived  in  its  adop- 
tion.* It  was  the  first  step  in  the  evolution  of  that 
system  of  safeguarded  currency  which  was  finally 
constructed  in  i8i6.f 

1 1 8.    COINAGE   OF  SILVER   SUSPENDED. 

Trouble  because  of  silver  was,  however,  not  yet 
at  an  end,  and  after  various  attempts  to  deal  with 
it,  the  further  coinage  of  silver  was  suspended, 
4 '  for  the  present, "  by  an  Act  of  June  21,1 798.  Not 
that  silver  did  not  remain  the  standard  coin  of  the 
realm,  and  legal  tender  to  any  amount.  But  "the 
state  of  the  coins,"  standard  though  they  were, 
and  "the  present  low  price  of  silver  bullion,"  mak- 
ing it  likely  that  operations  in  coinage  for  export 
would  increase,  temporary  suspension  of  coinage 
was  adopted.  Mr.  Shaw  says  that  even  after  this 
step  had  been  taken,  "the  years  of  the  bank  restric- 
tion [from  1797],  until,  that  is,  the  new  mint  law  of 
1816,  saw  the  heaviest  export  of  silver  probably 
that  England  has  ever  experienced;"  that,  for 


*The  officials  of  the  French  mint  advised  Henry  III.  in  1575  to 
adopt  a  system  in  which  the  gold  ecu  should  be  the  standard,  and 
some  experiment  was  made  in  this  direction,  but  with  no  proper 
understanding  of  its  significance  and  only  to  be  abolished  by  Henry 
IV.  in  1602. 

f  Hist  of  Currency,  p.  236. 


139 

example,  ''during  the  ten  years,  1801-1810,  nearly 
ten  millions  sterling  of  silver  was  exported  from 
England  (over  38,176,016  oz.)  while  the  gold 
exports  amounted  only  to  £2,088,483,  so  that,  of 
the  total  export,  silver  formed  eighty-two  per  cent, 
(net  amounts  in  both  cases) ; ' '  and  that ' '  the  straits 
of  the  poorer  classes,  due  to  the  existing  bimetallic 
system, ' '  were  most  extraordinary.* 

lip.    RECOINAGE   OF  SILVER— l8l6 

It  was  because  of  the  utter  breakdown  of  silver, 
and  in  order  to  restore  it  to  currency  and  service, 
that  the  measure  of  1816  for  recoinage  of  silver,  but 
with  limit  of  legal  tender  and  gold  as  the  sole 
standard  and  the  only  unlimited  tender,  was 
enacted.  If  silver  had  been  doing  good  service,  or  if 
any  other  way  of  making  it  do  good  service  had 
been  known,  the  change  to  gold  monometallism  of 
the  standard  would  not  have  been  made.  The 
4t  Whereas"  for  the  recoinage  of  silver  said  that 
''the  silver  coins  of  the  realm  have,  by  long  use 
and  other  circumstances,  become  greatly  dimin- 
ished in  number  and  deteriorated  in  value,  so  as 
not  to  be  sufficient  for  the  payments  required  in 
dealings  under  the  value  of  the  current  gold  coins, 
by  reason  whereof  a  great  quantity  of  light  and 
counterfeit  silver  coin  and  foreign  coin  has  been 
introduced  into  circulation  within  this  realm,  and 
the  evils  resulting  therefrom  can  only  be  remedied 
ty  a  new  coinage  of  silver  money."  f 


*ffift.  of  Currency,  pp.  241,  242. 

f  Quoted  by  Shaw;  Hist,  of  Currency ,  pp.  242,  243 


140 

I2O.    REASONS   FOR   THE   GOLD   STANDARD. 

And  for  the  further  enactment,  making  gold  the 
sole  standard  and  the  only  unlimited  tender,  and 
silver  tender  only  up  to  forty  shillings,  the  prefa- 
tory explanation  was : 

'  Whereas  at  various  times  heretofore  the  coins 
of  this  realm  of  gold  and  silver  have  been  usually 
as  legal  tender  for  payments  to  any  amount,  and 

GREAT  INCONVENIENCE  HAS  ARISEN  FROM  BOTH  THESE 
PRECIOUS  METALS  BEING  CONCURRENTLY  THE  STAND- 
ARD MEASURE  OF  VALUE  AND  EQUIVALENT  OF  PROP- 
ERTY,  IT  IS  EXPEDIENT  THAT  THE  GOLD  COIN  MADE 
ACCORDING  TO  THE  INDENTURES  OF  THE  MlNT 
SHOULD  HENCEFORTH  BE  THE  SOLE  STANDARD  MEAS- 
URE OF  VALUE  AND  LEGAL  TENDER  FOR  PAYMENT 
WITHOUT  ANY  LIMITATION  OF  AMOUNT,  AND  THAT 
THE  SILVER  COIN  SHOULD  BE  A  LEGAL  TENDER  TO  A 
LIMITED  AMOUNT  ONLY,  FOR  THE  FACILITY  OF  EX- 
CHANGE AND  COMMERCE,"  * 


CHAPTER  XI. 

BIMETALLISM  IN  FRANCE  — DISASTROUS  WORK- 
ING OF  THE  DOUBLE  STANDARD  SYSTEM 
DRIVES  FRANCE  TO  THE  GOLD  BASIS. 

121.    EARLY   FRENCH    MONEY. 

The  original  French,  livre,  now  called  the  franc, 
was  at  first  a  pound  weight  of  silver.  The  royal 
custom,  diligently  pursued  for  the  profit  that  there 

*  Quoted  by  Shaw;  Hist,  of  Currency,  p.  243. 


was  in  it,  was  that  of  changing  the  value  in  a 
<x)in  to  a  less  value,  while  making  it  pass  under 
the  same  name.  The  report  of  M.  Beranger,  on  the 
French  monetary  system,  in  1802,  stated  that  the 
ratio  of  gold  to  silver  had  been  changed  twenty-six 
times  between  1602  and  1773,  and  that  the  livre  was 
at  the  time  of  his  writing  worth  only  the  seventy- 
sixth  part  of  its  original  weight.  Recoinages 
always  meant  debasement  of  the  coin,  on  the  rascal 
principle  in  favor  with  needy  kings,  that  intrinsic 
value  could  be  left  out  to  any  extent  and  fiat  value 
substituted  for  it.  There  were  four  recoinages 
under  Louis  XIV.,  and  five  under  Louis  XV.  The 
ratio  between  silver  and  gold,  adopted  in  1726,  was 

14  5-8  to  i,  and  at  this  time  that  in  England  was 

15  1-7.     The  two  worked  to  make  silver  go  from 
England  to  France,  and  gold  go  from  France  to 
England,  simply  because  France  counted  silver  at 
more  than  its  real  value,  and  England  counted  gold 
at  more  than  it  was  worth.* 

122.   FRENCH   REVOLUTION   MONEY. 

Calonne,  the  finance  minister  of  Louis  XVI.,  un- 
dertook in  1785  a  recoinage  based  on  sound  money 
principles.  He  put  the  ratio  at  15  1-2,  not  on  the 
ground  that  it  was  the  exact  market  ratio,  but  in 
the  belief  that  a  rise  to  this  was  at  hand.  The 
monetary  system  of  Republican  France  was  built 
on  a  law  of  the  year  XL,  28th  March,  1803,  which, 
instituting  no  new  principle,  or  theory,  or  system 
in  French  currency,  but  carrying  on  the  old  loose 

*  Horace  White:  Money  and  Banking,  p.  61. 


142 

and  shifting  plan  of  a  double  standard,  made  silver 
the  basis,  and  issued  gold  money  of  a  value  based 
on  the  ratio  of  15  1-2,  — although  the  minister  of 
finance,  Gaudin,  admitted  that  for  a  long  time  the 
commercial  ratio  had  been  under  15.  The  neces- 
sary result  of  thus  overvaluing  silver  and  under- 
valuing gold  was  that  the  gold  went  where  it  was 
worth  more  and  France  was  filled  with  silver,  the 
bulk  and  weight  of  which  were  a  terror  to  all  who 
had  to  handle  money  to  any  amount.  It  was  not 
until  the  new  and  enormous  production  of  gold  in 
California,  Australia,  and  Russia,  about  1851,  that 
France  was  delivered  from  the  silver  incubus,  and 
had  gold  as  well  as  silver  money.  There  is  no 
truth  whatever  in  the  statement  sometimes  made, 
that  France,  under  the  1803  ratio  of  15  1-2,  kept  the 
ratio  steady  and  both  gold  and  silver  in  circulation. 

123.    MR.  SHAW   ON   FRENCH   BIMETALLISM. 

Mr.  Shaw  remarks  very  plainly  and  justly  on  the 
error  into  which  English  writers,  seeing  a  fixed 
and  steady  state  of  things  in  England,  due  to  gold 
monometallism  of  the  standard,  have  given  the 
credit  for  this  to  French  bimetallism,  when  in  fact 
France  had  no  experience  of  it.  Mr.  Shaw  says : 

"At  no  point  of  time  during  the  present  century 
has  the  actual  market  ratio,  dependent  on  the  com- 
mercial value  of  silver,  corresponded  with  the 
French  ratio  of  15  1-2,  and  at  no  point  of  time  has 
France  been  free  from  the  disastrous  influence  of 
that  want  of  correspondence  between  the  legal  and 
the  commercial  ratio.  The  opposite  notion,  which 
prevails  and  finds  expression  in  the  ephemeral 


143 

bimetallic  literature  of  to-day,  is  simply  due  to 
ignorance.  It  is  in  no  polemic  spirit,  but  simply 
in  the  interest  of  science  that  this  particular  misap- 
plication of  history  to  the  squaring  of  a  theory  is 
to  be  branded.  The  plainest  facts  of  history  are 
thereby  absolutely  misrepresented.  At  no  point 
of  a  graphic  representation  do  the  market  and  the 
legal  ratios  coincide.  After  three  years  of  fluctua- 
tions, 1803-06,  now  above  and  now  below,  the 
market  ratio  sinks  persistently  below  the  legal  for 
seven  years,  1807-13.  For  the  succeeding  five  or 
six  years,  1813-19,  the  market  ratio  was  as  con- 
sistently above  the  legal.  From  1819  up  to  1850 
its  course  was  undeviatingly  below  15  1-2;  then  for 
1851-67,  the  period  of  the  great  gold  outputs  of 
Australia  and  America,  as  undeviatingly  above. 
And  from  1867  up  to  our  own  days,  the  course  of 
the  commercial  ratio  has  been  again  unbrokenly 
below  the  151-2  ratio,  and  with  an  ever  increasing 
enormity  of  divergence." 

"The  influence  of  this  divergence,  of  the  com- 
mercial from  the  legal  ratio,  upon  France's  store  of 
the  precious  metals,  has  been  exactly  similar  in 
effect  and  force  with  that  of  similar  trains  of  event 
and  circumstance  in  the  monetary  history  of  France 
during  the  four  preceding  centuries.  From  1830 
to  1850,  while  the  market  ratio  remained  continu- 
ally below  the  legal  15  1-2,  there  was  a  profit  on 
the  import  of  silver,  and  a  persistent  and  heavy 
import  took  place.  In  1830  the  (balance  of  the) 
silver  imported  amounted  to  a  matter  of  six  mil 
lions  sterling;  in  1831  to  seven  and  one-quartei 
millions;  in  1834  to  four  millions;  in  1837  to  over 


144 

five  and  one-half  millions;  in  1838  to  nearly  five 
millions;  in  1841  to  nearly  five  millions;  in  1843  to 
over  four  millions;  in  1848  to  over  eight  and  one- 
half  millions;  and  in  1849  to  nearly  ten  millions. 
There  was  not  a  single  year  that  was  not  accom- 
panied by  this  import,  and  over  the  whole  twenty- 
two  years  the  total  of  importations  reached  the 
enormous  figure  of,  approximately,  ninety-two 
millions  sterling.  And  it  must  be  clearly  under- 
stood that  this  sum  represents  not  the  gross  but 
the  net  importation  or  balance  of  imports  over 
exports,  and  that  the  money  passed  into  the  cur- 
rency of  the  country,  taking  its  place  as  such  and 
displacing  gold." 

"With  the  year  1852  the  decisive  change  in  the 
ratio  sets  in  with  the  new  gold  influx.  The  market 
ratio  rises  above  the  15  1-2  of  the  French  law,  and 
the  profit  on  the  importation  and  coining  of  silver 
vanishes.  Its  place  is  taken  by  a  corresponding 
profit  on  the  importation  and  coinage  of  gold.  The 
fourteen  years  during  which  the  market  ratio 
remained  above  the  legal  15  1-2  witnessed  the 
importation  into  France  of  a  total  net  (or  balance) 
of  gold  to  the  amount  of  one  hundred  and  thirty- 
five  millions  sterling,  and  a  total  net  or  balance  of 
exportation  of  silver  of  sixty-six  and  two-thirds 
millions  sterling." 

"With  1865  the  final,  and,  so  far  as  the  nine- 
teenth century  is  concerned,  the  fatal  change  of 
the  commercial  ratio  sets  in.  It  sinks  persistently 
and  increasingly  below  the  legal  15  1-2,  in  face  and 
spite  of  the  united  mintings  of  the  Latin  Union, 
and  at  once  the  premium  on  the  importation  and 


145 

coinage  of  gold  changes  into  one  on  silver.  From 
1865  to  1875,  one  year  before  the  abandonment  of 
the  coinage  of  the  5 -franc  piece  and  the  consequent 
relinquishment  by  France  of  the  bimetallic  system, 
her  net  imports  of  silver  amounted  to  fifty-six 
millions  sterling."  * 

124.   DOUBLE  STANDARD   PERILS. 

The  final  outcome  of  French  experience  was 
compulsory  acceptance  of  the  gold  standard.  The 
formation  of  the  Latin  Union  in  1865,  and  the 
establishment  of  a  convention  which  came  into 
force  August  17,  1869,  for  Belgium,  France,  Switz- 
erland, and  Italy,  was  for  the  purpose,  not  of 
spreading  and  securing  bimetallism  of  the  standard, 
but  of  obtaining  securities  against  the  perils  of 
such  bimetallism  of  the  standard.  The  French 
monetary  commission  of  1867  told  a  part  of  the 
story  of  French  experience  in  the  following : 

"It  is  well  known  by  all  that  this  ratio  (of  1803 
-15  1-2)  by  the  simple  reason  of  its  being  fixed 
could  not  remain  correct.  There  was  quickly  a 
premium  on  gold,  and  silver  remained  almost 
.alone  in  circulation  until  near  1850.  The  discovery 
of  the  mines  of  California  and  Australia  suddenly^ 
-changed  this  situation  by  throwing  into  the  Euro- 
pean market  a  considerable  quantity  of  gold.  By 
the  side  of  this  force,  which  tended  to  create  a 
divergence  from  the  legal  ratio  by  lowering  gold, 
there  was  another  which  occasioned  a  rise  of  silver. 
Under  the  influence  of  various  circumstances,  too 

*Shaw:  Hist  of  Currency ',  pp.  172-182, 
IO 


146 

long  to  enumerate,  the  needs  of  the  extreme  East 
had  grown  in  unusual  proportions,  and  as  silver  is 
alone  in  favor  there,  it  was  exported  in  enormous 
masses.  There  was  a  premium  on  silver  to  the 
extent  of  eight  per  mille,  and  it  disappeared  almost 
completely  from  circulation,  yielding  place  to  gold. 
Preoccupied  by  the  situation,  the  government 
charged  a  commission  to  study  the  measures  to  be 
taken.  Its  labors  are  summed  up  in  the  report  of 
M.  de  Bosredon  (1857)."  * 

125.   THE   GOLD   STANDARD   A  NECESSITY. 

The  report  of  M.  de  Bosredon  examined  the  sys- 
tem tending  to  preserve  silver  money  intact  by 
lowering  the  value  of  gold  money,  and  conversely 
the  system  tending  to  the  adoption  of  the  gold 
standard  by  reducing  the  silver  money  to  the  state 
of  billon  or  subsidiary  money,  but  came  to  no 
decision.  Continuance  of  trouble,  and  the  example 
of  Switzerland,  which  had  in  1860  reduced  the 
value  of  its  smaller  coins,  led  to  the  appointment  of 
another  commission  in  1861,  which  advised  doing 
what  Switzerland  had  done.  ' '  It  did  this, ' '  to  recur 
to  the  language  used  by  the  commission  of  1867, 
"in  complete  knowledge  of  the  cause,  fully  recog- 
nizing that  in  so  doing  the  monetary  unit  of  silver, 
characteristic  of  our  system,  would  be  thereby 
broken,  at  any  rate  for  its  circulating  form;  for 
while  the  franc  no  longer  existed  in  law,  the  5 -franc 
was  disappearing  in  fact,  so  that  THE  CHANGE  WAS 


Quoted  by  Shaw:  Hist,  of  Currency,  p.  188. 


147 

EQUIVALENT    TO    THE    ESTABLISHMENT    OF    A  GOLD 
STANDARD."  * 


126.   THE   LATIN   UNION   AND    GOLD. 

The  advice  thus  given  was  acted  on  in  part  only, 
"by  a  law  of  1864,  affecting  only  the  fifty  centime 
and  the  twenty  centime  coins.  But  the  next  year 
resort  was  had  to  the  formation  of  the  Latin  Union, 
in  order  to  arrange  some  safeguard  against  the 
perils  of  the  tottering  monetary  system  of  France. 
The  commission  of  1867  remarked  on  the  inten- 
tional aspect  of  the  Latin  Union  :  "This  conven- 
tion places  in  the  front  rank  gold  money,  and 
reduces  the  piece  of  silver  of  two  francs  and  less  to 
the  role  of  token  money.  It  therefore  definitely 
determines  the  ascendency  of  the  gold  francs,  and 
solves  practical  difficulties  arising  from  the  double 
standard."  f 

Mr.  Shaw  justly  declares  in  regard  to  the  Latin 
Union,  that  it  was  formed  in  order  to  arrange  a 
remedy  for  the  evils  of  bimetallism  of  the  standard, 
as  these  were  felt  in  Belgium,  France,  Italy,  and 
Switzerland,  and  that  the  idea  that  it  was  formed 
for  the  maintenance  of  this  bimetallism  could  not 
have  arisen  but  for  the  complete  revolution  in  the 
conditions  of  production  of  the  precious  metals 
which  brought  a  fall  in  the  value  of  silver  from 
1871.  The  heavy  fall  which  made  itself  felt  in  1873 
set  in  motion  action  of  one  or  another  of  the  par- 


fuoted  by  Shaw:  Hist,  of  Currency ',  p.  189. 
fuoted  by  Shaw:  Hist,  of  Currency,  p,  190. 


148 

ties  to  the  Latin  Union  tending  to  the  final  over- 
throw of  bimetallism  of  the  standard,  and  adoption 
of  the  gold  standard. 

127.    FINAL  ADOPTION  OF   THE   GOLD  STANDARD. 

In  1876,  when  the  fall  of  silver  became  more  dis- 
astrously pronounced,  the  French  government  sur- 
rendered to  the  inevitable,  a  monetary  system  on 
the  same  gold  basis  which  England  had  adopted 
sixty  years  earlier.  The  minting  of  5 -franc  silver 
pieces  was  suspended  entirely,  by  a  bill  which  M. 
Leon  Say  submitted  to  the  Senate,  March  21,  1876, 
and  other  legislation  followed,  the  grounds  of  which 
were  stated  in  these  words : 

"The  events  which  have  happened  for  some  time 
past  in  the  relations  of  the  precious  metals  have 
brought  to  a  head  the  monetary  question  amongst 
us,  although  from  1815  Great  Britain  has  laid  down 
principles  which  have  attracted  round  her  an  ever- 
increasing  circle  of  nations." 

"The  theory  of  the  double  standard,  on  which 
our  monetary  law  of  the  year  XI.  reposes,  has  been 
called  in  question  ever  since  its  origin." 

"It  is,  to  our  conception,  less  a  theory  than  the 
result  of  the  primitive  inability  of  the  legislators  to 
combine  together  the  two  precious  metals  other- 
wise than  by  way  of  an  unlimited  concurrence  — 
metals,  both  of  which  are  destined  to  enter  into 
the  monetary  system,  but  which  recent  legislators 
have  learned  to  co-ordinate  by  leaving  the  unlim- 
ited function  to  gold  alone  and  reducing  silver  to 
the  role  of  divisional  money.  From  1857  the 
French  government  has  studied  the  question,  and 


149 

it  may  be  stated  that  since  that  date  the  principle 
of  the  gold  standard  has  won  increasing  favor 
through  our  several  administrations. ' '  * 

128.    HISTORIC   BIMETALLISM   OF   MONEY. 

The  interpretation  here  of  historic  bimetallism 
of  the  standard,  as  not  the  result  of  thought  or 
knowledge  justifying  a  theory,  but  as  an  effort, 
when  thought  and  knowledge  were  not  yet  in  pos- 
session of  the  field,  is  thoroughly  just.  Both  gold 
and  silver  money  were  wanted,  and  both  were 
made  standard  money,  and  often  enough  silver 
made  the  unit  of  value,  simply  because  no  better 
plan  was  yet  known.  The  better  plan  has  become 
known;  experience,  wherever  it  is  known,  proves 
it  to  be  the  only  sound  plan ;  gold  monometallism 
of  the  standard;  gold  and  silver  bimetallism  of 
money;  the  two  made  to  work  in  harmony  as 
money  by  giving  gold  alone  the  place  of  standard 
and  by  adjusting  silver  to  it  on  an  under- standard 
and  limited  legal  tender  basis. 


*  Quoted  by  Shaw:  Hist,  of  Currency,  pp,  196,  197. 


CHAPTER  XII. 

THE  UNITED  STATES  AND  BIMETALLISM  — 
COMPLETE  FAILURE  OF  SILVER  — THE  GOLD 
STANDARD  A  NECESSITY. 

129.    ALEXANDER   HAMILTON'S   MONEY   SCHEME. 

Alexander  Hamilton  figures  conspicuously  in  the 
early  monetary  history  of  the  United  States,  but  he 
was  far  from  being  a  prophet  of  sound  finance. 
Mr.  Shaw  says : 

"Hamilton's  scheme,  as  contained  in  his  most 
remarkable  paper,  was  for  a  silver  unit  or  dollar  of 
371  1-4  grains  of  pure  silver  and  a  ratio  of  15,  and 
instead  of  the  allowance  of  two  per  cent,  for  waste 
and  coinage,  the  principle  was  adopted  of  free  coin- 
age —  of  delivering  at  the  mint  the  same  weight  of 
pure  metal  coined  as  should  be  brought  to  it  in 
bullion  or  foreign  coin. ' '  * 

I3O.  ^FUNDAMENTAL  ERROR   OF   HAMILTON. 

Hamilton  expressed  himself  as  ' '  strongly  inclined 
to  the  opinion  that  a  preference  ought  to  be  given 
to  neither  of  the  metals  for  the  monetary  unit 
.  .  .  because  this  cannot  be  done  effectually 
without  destroying  the  office  and  character  of  one 
of  them  as  money  and  reducing  it  to  the  situation 
of  mere  merchandise." 

If  Hamilton  in  saying  this  had  in  view  bimet- 
allism of  the  standard,  he  spoke  from  the  imperfect 


*  History  of  Currency,  p.  251, 


knowledge  of  the  time.  The  whole  history  of 
modern  experience  with  money  shows  nothing 
more  plainly  than  the  effect  of  the  double-standard 
system  to  reduce  one  of  the  two  metals  from  the 
position  of  money  to  that  of  merchandise.  That  is 
the  largest  and  the  most  significant  fact  in  the  his- 
tory of  gold  and  silver,  that  if  both  are  made  stan- 
dard money,  one  of  them  will  go  as  money  and  the 
other  as  merchandise,  because  one  of  them,  com- 
pared with  the  other,  will  be  worth  more  to  sell 
than  to  circulate.  If  the  CJnited  States  were  to 
enact  the  legal  tender  parity  of  its  present  16  to  i 
silver  dollars  with  its  standard  gold,  it  would  be  in 
effect  the  same  as  offering  the  gold  for  sale  at  some- 
thing less  than  50  cents  on  the  dollar.  Even  if 
it  were  a  99-cent  silver  dollar,  the  effect  would  be 
to  sell  the  gold  for  99  cents  on  the  dollar.  Hamil- 
ton, therefore,  spoke  most  unadvisedly  when  he 
suggested  that  we  ought  to  have  a  double  standard 
in  order  to  keep  both  of  them  going  as  money. 

131.   BIMETALLISM    OF   MONEY   PRACTICABLE. 

What  Hamilton  said  may  indeed  mean  that,  while 
silver  held  the  field  he  more  than  suspected  that  a 
silver  unit  was  a  mistake,  and  that  gold  ought  to 
have  at  least  equal  place  with  it,  even  if  not  made 
the  standard  to  the  exclusion  of  a  silver  standard. 
But  whatever  lay  behind  in  Hamilton's  mind,  he 
made  a  capital  mistake  in  assuming  that  there  could 
not  be  at  one  and  the  same  time  monometallism 
of  the  standard,  and  especially  of  the  better 
standard,  and  bimetallism  of  money.  With  gold 
as  the  standard,  and  silver  coined  of,  say,  ninety 


152 

per  cent,  intrinsic  value,  and  issued  as  by  law 
exchangeable  for  gold,  or  upon  fiat  parity  with 
gold,  there  could  be  any  amount  of  silver  money 
that  the  public  would  take  and  use ;  not  indeed 
standard  money  the  same  as  gold,  but,  with  ninety 
per  cent,  of  intrinsic  value  and  ten  per  cent,  of  fiat 
value,  as  true  money  and  as  good  money  as  any 
other.  And  the  supreme  lesson  of  monetary 
experience  is  that  the  only  way  to  maintain  silver 
in  use  as  money,  good  money  and  ample  in  quan- 
tity, is  that  of  linking  it  with  a  gold  standard  as 
under  money,  or  on  an  under-standard  basis,  that 
of  intrinsic  value  to  about  ninety  per  cent,  and  fiat 
value  about  ten  per  cent. ;  the  object  being  to  guard 
against  rise  in  the  price  of  the  metal  changing  it 
from  money  into  merchandise. 

132.    FAILURE   OF    HAMILTON'S    SCHEME. 

Hamilton's  scheme  was  adopted  April  2,  1792, 
and  of  its  working  Mr.  Shaw  says : 

"For  a  period  the  system  established  in  1792  went 
on,  although  the  ratio  established  was  prejudicial 
to  gold.  But,  twenty  years  after,  the  natural  result 
arrived  in  America  as  in  England,  and  the  circula- 
tion of  gold  was  completely  extinguished  in  the 
United  States  by  the  unseen  withdrawal  of  the 
metal.* 

Hamilton's  scheme  had  made  the  standard  silver 
dollar  too  cheap  in  comparison  with  gold.  It, 
therefore,  paid  the  money-mongers  to  get  all  the 
gold  by  giving  the  cheaper  silver  dollars  for  it.  The 

*  Shaw :  Hist,  of  Currency,  p.  253. 


153 

United  States  sold  to  them  all  her  gold,  at  a  loss  to 
the  seller,  and  to  the  buyer  a  corresponding  profit. 
The  system,  trying  to  make  both  silver  and  gold 
money,  actually  made  the  gold  merchandise. 

133.   THE   LAW   OF    1834  THROWS   OUT   SILVER. 

The  state  of  things  created  by  Hamilton's  mis- 
takes, and  the  causes  of  which  were  not  understood, 
lasted  until  the  law  of  July  31,  1834,  made  a  change 
by  enacting  a  new  ratio,  i  to  16  instead  of  i  to  15. 
Benton,  in  his  ''Thirty  Years  View''  says  that  at 
that  time  "15  5-8  was  the  ratio  of  nearly  all  who 
seemed  best  calculated  from  their  pursuits  to  under- 
stand the  subject;  "  that  "the  thick  array  of  speak- 
ers was  on  that  side,  and  the  eighteen  banks  of  the 
city  of  New  York,  with  Mr.  Gallatin  at  their  head, 
favored  that  proportion;"  that  "the  difficulty  of 
adjusting  this  value,  so  that  neither  metal  should 
expel  the  other  had  been  the  stumbling  block  for 
a  great  many  years,  and  now  seemed  to  be  as 
formidable  as  ever;  "  that  "there  seemed  to  be  no 
way  of  getting  to  a  concord  of  opinion  either  from 
the  light  of  science,  the  voice  of  history,  or  the 
result  of  calculations;"  and  that  he,  "taking  his 
stand  upon  the  single  fact  that  equality  and  actu- 
ality of  circulation  had  existed  for  above  three 
hundred  years  in  the  Spanish  dominions  of  Mexico 
and  South  America,  where  the  proportion  was  16 
to  i,"  presented  this  with  such  effect  that  "all  the 
real  friends  of  the  gold  currency  soon  rallied  to  it 
.  .  .  and  eventually  the  bill  was  passed  (in  the 
House)  by  a  large  majority,  145  to  35 ;  "  while  "in 
the  Senate  it  had  an  easy  passage ;  Calhoun  and 


154 

Webster  supported  it,  Mr.  Clay  opposed  it;  and  on 
the  final  vote  there  were  but  seven  negatives." 

Mr.  Benton  went  on  to  state  "the  good  effects  of 
the  bill;"  how  "a  currency  (gold)  banished  from 
the  country  for  thirty  years  overspread  the  land 
and  gave  joy  and  confidence  to  all  the  pursuits 
of  industry.* 

134.    GOLD   BECOMES   THE   ONLY  MONEY. 

This  was  the  beginning  of  a  gold  basis  in  the 
United  States.  It  was  intended  to  bring  gold  back, 
and  the  gold  came  —  came  to  stay.  It  was  not 
intended  to  displace  silver,  but  that  was  the  effect, 
a  result  of  the  fact  that  the  silver  dollar  was  not 
cheap  enough,  was  worth  more  as  metal,  as  mer- 
chandise in  the  metal  market,  than  as  money,  and 
thus  gave  the  money-mongers  a  chance  to  make  a 
profit  by  taking  it  all  in  exchange  for  gold. 

135.    POSITION   OF  SILVER  REDUCED  IN  1853. 

Mr.  Shaw  says  in  regard  to  Benton 's  glowing 
account  of  the  coming  of  gold : 

"The  ratio  was  too  high,  and  the  silver  dollars 
could  not  be  maintained.  They  were  unduly 
exported,  especially  between  the  years  1848  and 
1851.  And  in  order  to  retain  within  the  country  a 
sufficient  amount  of  small  coin  the  amount  of  silver 
in  the  small  coins,  from  the  half-dollar  downwards, 
was  reduced  by  an  Act  of  February  24,  1853.  It 
was  at  the  same  time  provided  that  they  should  be 


Shaw:  Hist,  of  Currency,  pp,  257-259. 


155 

coined  only  on  government  account,  and  they  were 
made  legal  tender  only  up  to  the  sum  of  five  dol- 
lars. The  direction  of  this  step  will  be  seen  at  a 
glance  —  it  was  in  the  direction  of  the  gold  valua- 
tion. It  was  so  conceived  and  explicitly  stated  by 
Dunham,  who  piloted  the  bill  through  the  House. 
'We  have  had,'  he  said,  'but  a  single  standard  for 
the  last  three  or  four  years.  That  has  been  and 
now  is  gold.  We  propose  to  let  it  remain  so,  and 
to  adapt  silver  to  it,  to  regulate  it  (silver)  by  it 
(gold)/  Legally,  the  old  silver  dollar  was  left 
untouched,  and  the  gold  and  silver  valuation  was 
not  expressly  abolished.  No  reference  whatever 
was  made  to  the  silver  dollars  in  the  Act,  for  the 
simple  reason  that  for  years  nothing  had  been  seen 
of  them.  They  did  not  and  could  not  circulate. 
There  was  plenty  of  gold,  and  the  absence  of  silver, 
with  the  change  in  standard  therein  practically 
implied,  was  either  unnoticed,  or  regarded,  if  at 
all,  only  with  indifference." 

136.   SILVER  DISCREDITED  AS  A  STANDARD, 

Both  Mr.  Shaw  here,  and  Mr.  Dunham,  whom  he 
quotes,  miss  the  mark  of  perfectly  accurate  history. 
It  was  not  true  that  the  standard  had  become  gold 
only,  and  that  nobody  noticed  the  change,  or  at 
least  nobody  cared.  What  was  true  was  that  gold 
alone  was  the  money  of  the  country,  and  that  this 
most  naturally  suggested  that  the  standard  ought 
to  be  gold  alone.  Silver  was  an  absentee.  It  had 
entirely  quitted  the  field  of  money  to  figure  as 
merchandise  in  the  metal  market.  Nobody  desired 
it  to  quit  serving  as  money,  but  every  dollar  got 


1 56 

two  cents  for  changing  from  serving  as  money  to- 
figuring  as  merchandise,  and  away  they  went  with 
one  accord  scorning  to  remain  as  money.  And  that 
in  spite  of  the  fact  that  they  were  standard  money, 
if  only  they  would  stay  as  money. 

137.  SILVER  FROM    1873   NOT  A   STANDARD. 

Mr.  Shaw  goes  on  to  say  of  the  developments 
following  the  failure  of  silver  to  keep  its  place  as 
money  in  the  United  States : 

"The  final  step  in  the  simplification  and  unifica- 
tion of  this  system  was  commenced  in  1870,  when 
a  bill  was  prepared  for  a  revised  coinage  law  with  a 
pure  gold  standard,  silver  being  demonetized  as 
a  legal  tender  money.  The  bill  did  not  become 
law  until  April  12,  1873.  And  no  opposition  was 
expressed  in  either  the  House  or  the  Senate  to  the 
abolition  of  the  double  standard.  The  silver  dol- 
lars previously  coined  (of  which,  however,  but  few 
were  in  existence)  maintained  their  quality  as  legal 
tender ;  but  the  coining  of  new  dollars,  whether  on 
government  or  private  account,  was  forbidden. 
This  Act  was,  therefore,  simply  the  complement  of 
the  preceding  legislation  of  1853." 

138.  SILVER  NOT  "  DEMONETIZED"  IN  1873. 

The  expression  "demonetized  as  a  legal  tender 
money  "  is  not  only  misleading,  but  it  is  inaccurate. 
To  be  accurate  it  should  read  "  unlimited  legal  ten- 
der," and  to  recite  the  exact  fact  the  expression 
"demonetized"  should  not  be  used  at  all.  Silver 
remained  money  just  as  really  as  if  its  standard 


157 

character  had  not  been  taken  away.  Mr.  Horace 
White  states  the  exact  facts  of  money  when  he 
says:  "The  money  of  the  country  consists  of  all 
the  gold,  plus  all  the  other  instruments  of  ex- 
change which  are  redeemable  in  it. ' ' 

139.    GOLD    THE    STANDARD:   NOT   THE    SOLE    MONEY. 

The  law  of  1873  made  the  gold  dollar  the  unit  of 
value  or  dollar  of  account.  As  Mr.  Samuel  Hooper, 
whom  Mr.  White  quotes  from  the  Congressional 
Globe,  said  in  Congress,  April  9,  1872: 

"The  committee,  after  careful  consideration, 
concluded  that  twenty-five  and  eight-tenths  grains 
of  standard  gold  constituting  the  gold  dollar  should 
be  declared  the  money  unit  or  metallic  representa- 
tive of  the  dollar  of  account. " 

To  the  same  effect  Mr.  W.  L.  Stoughton  said : 

"Gold  is  practically  the  standard  of  value  among 
all  civilized  nations,  and  the  time  has  come  in  this 
country  when  the  gold  dollar  should  be  distinctly 
declared  to  be  the  coin  representative  of  the  money 
unit." 

Mr.  C.  N.  Potter  said  : 

"This  bill  provides  for  the  making  of  changes  in 
the  legal  tender  coin  of  the  country,  and  for  sub- 
stituting as  legal  tender  (without  limit),  coin  of 
only  one  metal  instead  as  heretofore  of  two.  I 
think  myself  this  would  be  a  wise  provision,  and 
that  legal  tender  coins,  except  subsidiary,  should 
be  of  gold  alone. ' '  * 


*  Money  and  Banking,  pp.  214,  215. 


158 

140.    SILVER  AS   MONEY   MADE   SECURE. 

And  further,  in  regard  to  silver,  Mr.  Hooper  said : 

"Section  sixteen  re-enacts  the  provisions  of 
existing  laws  defining  the  silver  coins  and  their 
weights  respectively,  except  in  relation  to  the  sil- 
ver dollar,  which  is  reduced  in  weight  from  412  1-2 
to  384  grains,  thus  making  it  a  subsidiary  coin  in 
harmony  with  the  silver  coins  of  less  denomination, 
to  secure  its  concurrent  circulation  with  them.  The 
silver  dollar  of  412  1-2  grains,  by  reason  of  its 
bullion  or  intrinsic  value  being  greater  than  its 
nominal  value,  long  since  ceased  to  be  a  coin  of 
circulation,  and  was  melted  by  manufacturers  of 
silverware. ' ' 

And  Mr.  Wm.  D.  Kelley  said: 

"I  wish  to  ask  the  gentleman  who  has  just  spoken 
if  he  knows  of  any  government  in  the  world  which 
makes  its  subsidiary  coinage  of  full  value.  The 
silver  coin  of  England  is  ten  per  cent,  below  the 
value  of  gold  coin.  And,  acting  under  the  advice 
of  the  experts  of  this  country  (the  United  States), 
and  of  England  and  France,  Japan  has  made  her 
silver  coinage,  within  the  last  year,  twelve  per 
cent,  below  the  value  of  gold  coin,  and  for  this 
reason :  It  is  impossible  to  retain  the  double  stan- 
dard. The  values  of  gold  and  silver  continually 
fluctuate.  You  cannot  determine  this  year  what 
will  be  the  relative  values  of  gold  and  silver  next 
year.  Hence  all  experience  has  shown  that  you 
must  have  one  standard  coin,  which  shall  be  a  legal 
tender  for  all  others,  and  then  you  may  promote 
your  domestic  convenience  by  having  a  subsidiary 
coinage  of  silver,  which  shall  circulate  in  all  parts 


159 

of  your  country  as  legal  tender  for  a  limited 
amount,  and  be  redeemable  at  its  face  value  by 
your  government. ' '  * 

141.    GOLD   STANDARD   MEANS   DOUBLE   MONEY. 

The  evidence  here  is  very  clear  that  silver  was 
not  demonetized.  It  was,  on  the  contrary,  changed 
in  its  relation  to  gold,  destandardized,  for  the  sole 
purpose  of  making  it  stay  and  work  as  money,  in- 
stead of  failing  to  so  work.  To  have  silver  as  well 
as  gold  as  money,  and  to  have  as  ample  a  supply  of 
silver  money  as  could  be  used,  was  the  purpose  of: 
taking  silver  out  of  the  position  of  a  standard,  anct 
giving  it  a  subsidiary  position.  The  old  false  idea 
made  nothing  money  unless  it  were  standard 
money.  The  new  idea  makes  two  kinds  of  money, 
standard  of  gold,  and  subsidiary  of  silver  upon  a 
basis  of  fiat  parity  with  gold.  And  it  does  this  as 
the  only  means  of  having  both  gold  and  silver 
money  working  together,  instead  of  one  working 
as  money  and  the  other  taken  away  as  merchandise, 

142.    THE    BLAND    BILL    DOUBLE    STANDARD    SCHEME. 

It  was  within  a  very  short  time  after  the  changes 
made  in  1873  that  fresh  interest  in  silver  was  stim- 
ulated by  the  new  mines  of  that  metal  in  Nevada, 
and  by  the  expectation  of  the  resumption  of  specie 
payments.  This  led  to  efforts  to  get  silver  made 
again  a  standard  along  with  gold.  A  commission 
appointed  August  14,  1875,  recommended  the  estab- 
lishment of  the  double  standard.  Bland,  one  of 


Money  and  Banking,  pp.  214-216. 


i6o 

the  commission,  offered  a  bill,  for  re-establishing1 
the  double  standard  at  the  ratio  of  16  to  i  (15.988 
to  i)  with  free  coinage  of  silver.  The  majority  of 
the  Congress  elected  in  1876  represented  the  patri- 
otic enthusiasm,  and  opinionated  half-knowledge 
or  absolute  ignorance  of  money  questions  and 
money  history,  of  the  mass  of  the  people.  They 
favored  the  Bland  bill,  but  could  not  carry  it 
against  the  Senate  and  the  President.  The  House 
passed  the  bill,  to  restore  the  double  standard  and 
coin  silver  on  the  same  terms  as  gold,  and  at  the 
ratio  of  1 6  to  i.  In  the  Senate  Mr.  Allison  carried 
an  amendment  which  dropped  free  coinage  but 
provided  that  the  government  should  buy  every 
month  not  less  than  $2,000,000  worth  and  not  more 
than  $4,000,000  worth  of  silver  and  coin  it  into  "  16 
to  i "  silver  dollars,  which  should  be  full  legal  ten- 
der money.  Although  even  this  the  President 
vetoed,  it  was  passed  over  his  veto,*  and  under  its 
operation  the  whole  number  of  dollars  coined  was 
378,166,793,  of  which  about  57,000,000  were  put  in 
circulation,  and  the  remainder  were  made  the  basis 
of  silver  certificates  which,  although  not  legal  ten- 
der, were  receivable  for  all  public  dues,  and  were 
thus  readily  current. 

143.    THE  BLAND   BILL   RESULTS. 

Mr.  Shaw  says  of  the  (Allison)  Bland  bill,  which 
had  the  Bland  restoration  of  the  double  standard 
left  out,  and  was  thus  Bland  only  in  name : 

"The  Bland  bill  deceived  the  hope  of  both  par- 

*Feb.  28,  1878. 


ties,  as  such  a  compromise  might  be  expected  to 
do.  It  remained  in  force,  notwithstanding,  till 
August,  1890,  and  during  the  twelve  years, 
1878-1890,  the  United  States  coined  a  matter  of  370 
million  silver  dollars,  employing  therein  a  third  of 
the  total  contemporary  production.  Almost  yearly, 
up  to  1887,  the  repeal  of  the  silver  purchase  clauses 
of  the  Bland  bill  and  the  suspension  of  the  silver 
coinage  was  recommended  to  Congress  by  Presi- 
dential message,  and  in  the  reports  of  the  Secretary 
of  the  Treasury."  * 


•    CHAPTER  XIII. 

GERMANY  AND  BIMETALLISM  — THE  GOLD 
STANDARD  COMES  IN  WITH  THE  EMPIRE  — 
A  RECENT  GERMAN  SILVER  CRAZE. 

144.    EARLY   GERMAN   MONETARY   EFFORT. 

Germany,  says  Mr.  Shaw,  had  not  less  than  nine 
distinct  and  independent  coinage  systems  in  exist- 
ence, when  at  last  the  events  of  .1871  came  to  give 
her  unity  in  her  coinage,  along  with  unity  in  her 
political  life.f 

An  unsuccessful  attempt  to  secure  mint  unifica- 
tion throughout  Germany  had  been  made  in  1738, 
and  this  attempt  had  been  renewed  in  the  General 
Mint  Convention  of  the  States  of  the  Zollverein, 
which  was  agreed  upon  in  full  assembly  of  dele- 
gates at  Dresden  July  3Oth,  1838,  and  ratified  there 
January  7,  1839. 

*  Hist,  of  Currency,  p.  263. 
\"Ifist.  of  Currency,"  p.  198. 

II 


1 62 
145.   THE   VIENNA   CONVENTION. 

The  agreement  of  1838-39  had  continued  in  force 
nominally  until  the  later  and  still  more  famous 
convention  of  Vienna  in  1857,  which  undertook  to 
bring  into  one  system  the  three  competing  systems 
then  existing  in  Germany,  those  of  Austria,  Prus- 
sia, and  South  Germany  or  Bavaria,  and  to  secure 
a  properly  regulated  gold  coinage. 

In  regard  to  the  latter  Mr.  Shaw  points  out  how 
exactly  the  two  cases  of  Germany  in  1857  and  of 
the  Latin  Union  countries  in  1865,  were  brought 
about  by  the  working  of  bimetallism  of  the  stand- 
ard, after  the  gold  price  of  silver  had  risen  above 
60  7-8  pence  per  standard  ounce.  The  profit  on 
minting  gold  in  France  at  15  1-2,  sent  the  money- 
mongers  into  Germany  to  exchange  silver  for  it, 
until  gold  had  nearly  disappeared  and  its  place  was 
filled  with  silver. 

The  action  of  the  Vienna  Convention  looked  to 
the  gradual  adoption  of  gold  coinage,  but  the  effect 
of  the  agreements  reached  was  quite  in  the  other 
direction,  that  of  establishing  the  maintenance  of 
a  pure  silver  currency.  The  experiment  of  a  trade 
gold  coin  failed  completely.  The  premium  on  the 
minting  of  gold  in  France  drew  all  the  gold  there, 
and  left  Germany  little  but  silver. 

146.  GERMANY'S  GOLD  STANDARD  SYSTEM. 

From  the  date  of  the  Vienna  Convention,  prog- 
ress was  sought  on  the  basis  of  a  silver  standard, 
with  gold  as  trade  money,  and  even  after  the 
moment  came,  with  the  erection  of  the  Empire, 


i63 

when  everything  favored  complete  reform,  it  was 
only  at  the  last  stage  of  the  preparation  of  a  bill  to 
establish  a  monetary  system  that  the  gold  standard 
was  settled  upon. 

The  Act  to  establish  the  system  passed  Dec.  4th, 
1871,  and  a  second  Act  of  July  9th,  1873,  declared 
the  law  of  tender.  Mr.  Shaw  says: 

"The  unit  of  the  system  is  the  mark,  which  is  the 
yyg^-g-  part  of  a  pound  of  gold  of  500  grammes  at 
9-10  fine,  and  is  coined  into  pieces  of  20  and  10 
marks.  The  gold  crown  is  a  lo-mark  piece,  is  9-10 
fine,  and  struck  at  a  tale  of  139  1-2  pieces  to  the 
German  pound;  charge  for  coinage,  3  marks  per 
pound  of  fine  gold." 

"The  pound  of  fine  silver  is  struck  into  100 
marks,  9-10  fine.  The  total  amount  of  silver  coin 
not  to  exceed  10  marks  per  head  of  population. 
No  individual  need  accept  more  than  20  marks  of 
imperial  silver  coin  in  payments.  They  are 
accepted  in  any  amount  by  the  Empire  and  by  the 
Federal  States." 

"All  other  German  coins  are  no  longer  legal  ten- 
der, and  have  been  withdrawn,  with  the  single 
exception  of  the  thaler  pieces.  Whatever  pieces  of 
this  kind  still  exist  are  legal  tender  to  any  amount, 
like  the  imperial  gold  coins,  each  being  equal  to  3 
marks. ' '  * 

147.   GERMAN   GOLD   AND   SILVER 

"The  total  silver  withdrawn  from  circulation  up 
to  the  close  of  1880  was  1,080,486,138  marks.  Of 


"Hist,  of  Currency,"  pp.  215,  2l6. 


164 

this  amount  382,684,841  marks  were  delivered  to 
the  mint  for  coinage  into  the  new  imperial  silver 
coins.  The  remaining  696,797,069  marks  were 
melted  into  silver  and  produced  7,474,644  pounds 
of  fine  silver.  Of  this  quantity  7,102,862  pounds 
were  sold  up  to  May,  1879."  * 

The  account  of  the  gold  minting  of  the  recon- 
structed German  Empire,  from  1872  to  December, 
1878,  makes  a  complete  total,  in  Mr.  Shaw's  report, 
of  1,205,786  Ibs.  weight  =  ^84, 103, 584. f 

148.    RECENT   GERMAN  AGITATION. 

There  has  sprung  up  .  recently  ^  in  Germany  a 
movement  of  profound  discontent  of  the  landown- 
ers and  land- cultivators,  the  uninstructed  and 
headstrong  zealots  of  which  are  trying  to  work  the 
discredited  delusion  of  the  double  standard.  An 
injury,  not  to  say  a  wrong,  had  been  done  to  Ger- 
man agriculture  and  German  land  by  a  treaty  of 
commerce  with  Russia  admitting  Russian  cereals 
at  a  low  rate  of  duty.  The  weight  of  the  discon- 
tent, and  the  hold  which  a  delusive  bimetallism  of 
the  standard  had  upon  the  chiefs  of  the  discon- 
tent, made  it  a  necessity  of  policy  for  the  govern- 
ment to  go  somewhat  into  the  matter,  and  for  the 
sound  money  Liberals  to  lend  themselves  to  the 
hopeless  quest  of  relief  for  low  prices  in  bimetr 
allism  of  the  standard. 


*Shaw:  "Hist,  of  Currency,'"  p.  219. 

fid.  p.  218. 

I  Refers  to  1896. 


i65 

149.    INQUIRY   ON   BEHALF  OF   SILVER. 

In  the  spring  of  1894  a  commission  of  sixteen 
members  was  appointed  by  the  Imperial  govern- 
ment to  consider  whether  means  could  be  found  for 
raising  the  price  of  silver  and  making  it  more 
stable.  Twenty-one  sessions  of  this  commission 
accomplished  nothing  more  than  to  show,  as  its 
president  said  in  closing  its  proceedings,  how  diffi- 
cult it  is  to  find  something  which  would  evidently 
be  desirable  if  it  were  attainable.  The  proposition 
of  an  international  conference  to  promote  the  free 
coinage  of  both  metals  on  an  agreed  ratio  (pre- 
sumably 15  1-2  and  regardless  of  England)  was 
favored  by  the  six  decided  bimetallists  on  the  com- 
mission, but  entirely  opposed  by  the  two  moderate 
bimetallists  and  the  seven  gold  standard  members 
(an  eighth  being  absent).  The  proposal  of  the  two 
moderate  bimetallists  of  a  plan  looking  to  a  larger 
use  of  silver  by  augmenting  the  weight  of  the  sil- 
ver coins  in  actual  use,  was  rejected  by  all  the  other 
members.  The  plan  was  to  be  carried  out  under  a 
convention  with  other  governments,  and  especially 
that  of  Great  Britain,  with  an  engagement  of  the 
latter  to  reopen  the  Indian  mints.  This  was  a 
suggestion  in  the  direction  of  bimetallism  of  money, 
which  may  reasonably  attempt  to  do  as  much  for 
silver  as  respect  for  the  place  of  silver  below  the 
gold  standard  will  permit. 

150.    LATEST  GERMAN  SILVER  MOVE. 
At  a  later  date,  after  the  close  of  Caprivi's  min- 
istry, and  the  gain  which  the  land-owning  interest 
made  by  the  change,  a  motion  asking  the  Imperial 


1 66 

government  to  take  the  initiative  for  assembling  a 
new  international  monetary  conference,  received 
the  support  of  both  the  Conservative  parties  and  of 
the  Catholic  party,  and  of  nearly  all  the  National 
Liberals;  the  latter  yielding,  against  their  judg- 
ment, to  the  pressure  on  them  from  a  portion  of 
their  constituents,  and  in  the  hope  that  a  confer- 
ence, inevitably  stopping  short  of  resurrection  of 
bimetallism  of  the  standard,  might  yet  find  some 
remedy  for  the  existing  discontent,  or  at  least 
some  cure  for  the  silver  craze  of  the  German 
peasants.* 

CHAPTER  XIV. 

INDIA  AND  THE  GOLD  STANDARD. 
151.  INDIA'S  TRIAL  OF  SILVER. 

British  India  emerged  from  the  difficulties  of  the 
double  standard  in  1835,  when  the  silver  standard 
was  adopted.  But  the  growth  of  commercial  inter- 
ests gave  rise  to  objection  to  silver  on  account  of 
its  bulk  and  weight.  "As  early  as  1859,"  savs  Mr. 
Horace  White,  "  the  commercial  classes  of  the 
country  began  to  urge  the  government  to  adopt  the 
gold  standard,  with  silver  as  subsidiary  currency. 

"In  1864  the  Bombay  Association  addressed  a 
memorial  to  the  government  on  the  subject,  saying 
that  'a  silver  currency  might  have  been  suitable  to 
the  country  when  its  commerce  was  limited  and 

*  Mr.  Horace  White  gives  a  very  lucid  account  of  these  recent 
German  movements,  in  an  appendix  to  his  "  Money  and  Banking, " 
pp.  447-452. 


16? 

payments  in  the  main  extremely  small,  but  was 
very  inconvenient  when  wealth  was  largely  diffused 
throughout  the  country  and  the  operations  of  com- 
merce had  become  so  enormous.  The  transport  of 
this  bulky  and  cumbersome  currency  entailed  heavy 
.and  useless  expense  on  the  country  and  was  a  seri- 
ous impediment  to  trade.' 

' '  The  Bombay  chamber  of  commerce  took  similar 
action,  saying  that  'the  importation  of  gold  into 
India  had  steadily  increased  for  many  years,  though 
it  was  not  legal  tender;  that  the  natives  themselves 
had  devised  a  rude  remedy  for  the  deficiency  of  the 
existing  silver  currency  by  using  gold  bars  stamped 
by  the  Bombay  banks  as  a  circulating  medium; 
and  that  the  exclusion  of  gold  from  the  currency  of 
India  could  not  be  justified  or  be  considerd  other 
than  barbarous,  irrational  and  unnatural. '  "  * 

This  effort  of  India  itself,  more  than  thirty  years 
since,  to  secure  the  gold  standard,  with  silver  sub- 
sidiary, caused  the  government  of  India  to  suggest 
that  a  system  of  bimetallism  be  adopted.  The 
British  government  refused  on  the  ground  of  the 
impracticability  of  a  double  standard.  By  1878  the 
government  of  India  wished  to  close  the  mints 
against  the  free  coinage  of  silver  until  the  demand 
should  operate  to  cause  a  rise  of  the  standard  coin 
in  value.  Silver  had  fallen  from  about  6od.  an 
ounce  to  5od. ,  and  the  suggestion  to  close  the  mints 
for  a  time  was  proved  by  the  event  to  have  been  a 
wise  one.  But  British  hesitation  in  London  refused. 

In  1886,  silver  having  fallen  to  42d.  per  ounce, 


*"  Money  and  Banking"  pp.  69,  70. 


1 68 

the  India  government    again   suggested    decisive 
measures  and  again  met  British  refusal.     March  23, 

1892,  with  silver  down  to  $gd.,  the  India  govern- 
ment called  the  attention  of  the  home  government 
in   London  to  the  special  request  of  the  Bengal 
chamber  of  commerce  that  something  be  done,  but 
still  British  hesitation  prevailed. 

152.   INDIA   DEMANDS   GOLD. 

June  21,  1892,  the  India  government  sent  to  Lon- 
don suggestions  for  adopting  the  gold  standard  with 
large  use  of  legal  tender  silver,  which  had  been 
matured  by  Sir  David  Barbour,  the  India  Financial 
Secretary  and  a  thorough  bimetallist.  This  emi- 
nent India  official,  although  a  bimetallist,  declared 
that,  unless  the  Brussels  Conference  satisfactorily 
arranged  for  international  bimetallism,  the  gold 
standard  would  be  a  necessity  in  the  fast  advancing 
wreck  of  Indian  finances  due  to  the  rapid  decline 
and  the  worse  uncertainties  of  silver. 

At  a  later  date  Sir  David  again  pointed  out  how 
very  bad  the  silver  situation  in  India  was,  how  con- 
fidence in  silver  was  utterly  destroyed,  and  how 
certainly  failure  of  the  United  States  to  continue 
its  monthly  silver  purchases  would  tend  to  hasten 
the  worst  possible  breakdown  of  silver  dependence 
in  India.  The  British  government  met  this  des- 
perate silver  situation  of  India  by  entrusting  a 
committee  of  eminent  experts,  of  which  Lord  Chan- 
cellor Herschell  was  chairman,  with  the  task  of 
determining  what  should  be  done;  and  May  31, 

1893,  this  committee  reported  on  the  chief  facts  of 
money  and  commerce  in  India,  and  recommended 


,69 

that  the  request  of  the  government  of  India  for 
permission  to  close  the  mints  against  silver  should 
be  granted,  except  as  rupees  might  be  coined  on 
government  account. 

153.   INDIA  GETS  THE  GOLD  STANDARD. 

The  British  government  in  London  gave  its  con- 
sent at  last,  after  fifteen  years  of  refusal,  to  the 
demand  of  India  for  stopping  the  coinage  of  silver, 
and  June  26,  1893,  the  India  government  announced 
this  in  India.  It  was  supposed  that  rupees  in  silver 
might  appreciate  in  value,  and  to  control  this  the 
government  announced  that  it  would  supply  them 
at  the  rate  of  is.  4d.  per  rupee,  and  would  receive 
gold  at  that  rate  in  payment  of  taxes. 

This  did  not  mean  that  if  silver  kept  on  falling 
the  government  would  hold  up  the  silver  rupee  to 
is.  4d.  gold  value.  And  silver  did  keep  on  falling, 
first  from  38  3-4d.  early  in  June,  to  30  i-2d.  after 
the  closing  of  the  mints,  and  later  to  27  i-2d. 
Although  the  British  government  held  back  from 
selling  in  London  the  bills  payable  in  rupees  in 
India  for  less  than  is.  4d.  per  rupee,  they  finally 
had  to  sell  at  15  3-4d.,  and  from  that  down  to  i3d. ; 
and  even  i3d.,  with  silver  at  27  1-2,  meant  2d.  more 
than  the  value  of  the  silver  in  the  rupee.  The 
rupee,  that  is,  will  pass  in  India  for  that  much  more 
than  its  real  silver  value. 

India  thus  came  to  the  gold  standard,  not  through 
the  eagerness  of  London  to  fasten  it  upon  her,  but 
in  spite  of  protracted  British  hesitation,  and  through 
the  sense,  which  commerce  in  India  had  created,  of 
the  necessity  of  gold  for  large  use  in  place  of  silver, 


and  as  a  standard  far  less  uncertain  than  silver,  to 
which  silver  could  be  related  with  some  possibility 
of  holding  fairly  steady  its  currency  value. 

154.   INJURY  DONE  BY  FREE  COINAGE. 

A  recent  statement  of  undoubted  authority  on 
the  silver  situation  in  India  shows  conclusively 
that  the  suspension  of  free  coinage  of  silver  had  no 
other  purpose  than  that  of  increasing  the  useful- 
ness of  silver  as  money  in  that  country.  The  rep- 
resentation commonly  made  by  advocates  of  free 
coinage  that  the  Indian  mints  were  closed  to  silver 
in  order  to  give  an  advantage  to  gold  and  compel 
India  to  pay  in  the  dearer  gold  instead  of  in  the 
cheaper  silver,  has  never  been  true,  and  could  not 
be  true.  India  has  all  along  paid  in  gold,  that  is, 
in  silver  rupees  counted  at  whatever  they  would 
bring  in  gold  in  London.  And  India's  trouble  has 
been  that  the  silver  rupees  kept  falling  in  value  in 
the  London  market,  as  the  direct  and  inevitable 
result  of  the  steadily  falling  value  of  silver  and  of 
the  supply  of  rupees  exceeding  the  demand  to  such 
an  extent  as  to  make  it  difficult  to  hold  up  the  value 
of  the  coins  above  that  of  the  silver  in  them. 

155.  INDIA'S  DEMAND  FOR  SILVER. 

India  was  for  many  years  as  large  a  taker  of  sil- 
ver as  the  United  States  could  be  expected  to  be 
under  free  coinage.  India  is  a  continent  in  breadth 
and  in  bulk  of  population,  and  it  is  insatiable  in  its 
readiness  to  take  silver.  The  net  imports  of  silver 
into  India  in  the  twenty- three  years  from  1870-71 


to  1892-93  were  165,226,000  tens  of  rupees,  an 
average  of  7,184,000  tens  of  rupees  —  about  $35,- 
000,000  —  annually.  This  absorbed  nearly  one- 
third  of  the  silver  production  of  the  world.  It  was 
a  case,  if  there  could  be  one,  of  a  section  of  man- 
kind, almost  more  than  a  nation,  large  enough  and 
strong  enough  and  independent  enough,  to  carry 
silver  as  money,  and  get  the  best  work  of  money 
out  of  it,  no  matter  what  might  or  might  not  be 
done  with  silver  elsewhere. 

156.  FUTILE  EFFORT  TO   HOLD  UP  SILVER  IN  INDIA. 

But  as  a  matter  of  fact  the  independence  was 
purely  imaginary.  In  trading  with  the  world  India 
had  to  have  her  values  counted  in  gold,  and  values 
which  India  herself  counted  in  silver  rose  or  fell, 
when  counted  in  gold,  just  according  to  the  market 
price  of  silver,  together  with  any  extra  fiat  or  credit 
value  which  the  Indian  silver  coins  might  have. 
The  actual  case  was  that  the  market  price  of  silver 
went  lower  and  lower,  and  that  the  coinage  was  so 
immense  as  to  make  it  hard  to  give  the  coins  even 
a  small  extra  credit  value.  It  was  desired  to  have 
the  rupee  pass  in  trade  for  16  pence  or  32  cents, 
when  it  was  intrinsically  worth  as  silver  consider- 
ably less  than  that.  The  immense  need  of  the 
money  for  trade  throughout  India,  and  the  Indian 
liking  for  silver,  gave  some  chance  to  carry  the 
rupees  at  more  than  their  intrinsic  value,  but  the 
excessive  quantity  of  them,  with  the  free  coinage 
mills  running  wide  open,  made  the  difficulty  of 
circulation  at  partly  credit  value  almost  insuper- 
able. The  bottom  question  all  the  time  was,  and 


always  must  be,  at  what  rate  the  people  of  India 
would  take  them  in  trade,  If,  for  example,  a  rupee 
actually  worth  in  silver  eleven  cents  would  pass 
for  fourteen  or  fifteen  cents  in  India,  that  would 
put  up  the  gold  price  of  rupees  in  London.  The 
ignorant,  or  perhaps  mendacious,  calumny  has 
been  employed  in  certain  quarters  that  English 
interest  was  for  gold  against  silver,  and  that  coin- 
age of  silver  was  stopped  to  injure  silver  and 
thereby  benefit  gold.  The  exact  contrary  has 
been,  and  always  must  be,  true.  Although  India 
greedily  absorbs  gold,  the  immense  trade  of  the 
common  people  requires  silver,  and  English  inter- 
est is  as  strong  for  silver  in  India,  and  to  benefit 
silver  rupees  in  the  gold  market  of  London,  as  it 
is  for  gold  in  England.  How  to  make  the  rupee 
pass,  say  for  16  pence  in  paying  and  purchasing 
power  in  India,  when  the  intrinsic  value  of  the  sil- 
ver in  it  was  far  below  that,  has  been  the  problem 
of  recent  Indian  finance. 

157.    PRESENT   STATUS   OF   SILVER   IN   INDIA. 

It  was  when  all  other  plans  had  failed  that  the 
suspension  of  coinage  was  resorted  to,  in  the  hope 
that  a  fixed  parity  could  be  created  through  the 
credit  of  the  government  and  the  limitation  of  the 
supply  of  silver  rupees  to  a  quantity  not  in  excess 
of  the  legitimate  monetary  interests  of  India.  It 
was  something,  however,  which  could  not  be  forced. 
It  was  desired  to  have  the  rupee  sell  for  16  pence, 
or  about  32  cents,  in  the  London  market.  But  the 
market  would  not  pay  that,  until  the  growth  of 
credit  warranted  doing  so.  The  bills  payable  in 


173 

silver  rupees  in  India,  which  are  sold  in  London, 
brought  only  13.62  pence  in  April,  1894;  but  in 
March,  1896,  the  price  had  reached  14.375,  an^  th*8 
was  advanced  to  almost  16  in  July,  1896.  By  limit- 
ing- the  supply  of  silver  to  the  real  needs  of  India, 
government  credit  and  popular  demand  have  raised 
the  rupee  from  its  recent  hopeless  estate  under 
free  coinage.  To  no  small  extent  an  arbitrary 
credit  value  has  been  given  to  the  silver  coins  in 
spite  of  the  continued  low  price  of  silver.  Free 
coinage  prevented  this  while  it  lasted,  and  return 
to  free  coinage  would  destroy  this  most  remarkable 
success  of  Indian  finance. 


CHAPTER  XV. 

MONEY   AND  PRICES. 

158.  ENTIRELY  FALSE  ASSERTION  OF  DISASTROUS 
FALL  CAUSED  BY  GOLD  —  NO  DISASTROUS  CHANGE 
IN  PRICES. 

It  is  said  that  the  single  gold  standard  has  pro- 
duced a  disastrous  fall  in  the  prices  of  commodities. 
To  this  statement,  which  puts  a  wholly  false  con- 
struction upon  very  simple  facts,  there  is  the  most 
conclusive  possible  answer,  no  matter  what  the 
point  of  view  from  which  we  come  at  the  question. 
It  is  especially  gross  falsification  to  say  that  under 
gold  there  have  been  changes  for  the  worse. 
There  has  been  no  general  disaster,  but  quite  the 
contrary.  Wages  have  advanced  since  1873,  with 
the  result  of  giving  to  the  great  mass  of  the  people 


174 

more  of  the  necessities  and  comforts  of  life  for  the 
same  labor  than  they  could  command  before.  The 
most  thorough,  full  and  conclusive  study  of  prices, 
wages,  transportation,  and  other  conditions  of 
demand  and  supply,*  has  shown  by  unanswerable 
figures,  which  cannot  lie,  that  the  purchasing  power 
of  money  wages  has  been  rising  steadily  for  at  least 
twenty  years,  and  that  the  decline  in  prices  since 
1873,  and  especially  since  1882,  has  been  a  source 
of  prosperity  and  not  of  depression  to  the  great 
mass  of  the  people.  Low  prices  for  whatever  the 
people  have  to  buy,  coupled  with  correspondingly 
high  wages  for  labor,  are  a  blessing  and  not  a 
disaster. 

159.   CAUSE  OF  DECLINE  IN  PRICES. 

The  decline  in  the  prices  of  commodities  has 
been  due  to  the  ability  and  desire  of  sellers  to  sup- 
ply the  demand  at  such  lower  prices  as  have  pre- 
vailed, and  has  not  been  due  to  the  gold  standard. 
So  far  as  this  decline  has  touched  American  pro- 
ducts, and  so  far  injured  American  producers,  it 
has  been  in  part  the  result  of  immensity  of  Ameri- 
can production,  causing  necessity  for  selling  at  low 
prices  in  order  to  sell  at  all,  and  in  part  the  result 
of  immense  production  of  our  products  in  other 
countries,  making  them  our  competitors  in  all  the 
markets  of  the  world.  The  prices  of  cotton,  wheat, 

*  Report  on  Wholesale  Prices,  Wages  and  Transportation,  made 
by  the  Senate  Committee  on  Finance,  March  3,  1893,  of  which  Mr. 
Horace  White  says,  — "a  work  which  has  never  been  surpassed 
in  this  or  any  other  country  in  fullness,  thoroughness  and 
impartiality." — "  Money  and  Banking"  p.  109. 


175 

and  corn  are  especially  affected  by  excess  of  pro- 
duction on  our  own  part,  and  by  competitive  pro- 
duction in  other  countries. 

l6o.   HOW   SUPPLY   AND   DEMAND   WORK. 

An  illustration  of  how  supply  and  demand  affect 
prices  may  be  found  at  almost  any  time  in  the  press 
reports  of  the  current  market.  A  very  good 
example  is  the  following  statement  from  the  Even- 
ing Transcript  of  Boston,  Mass. : 

"The  potato  yield  of  the  country  last  year  was  a 
great  success  as  a  crop  and  a  great  failure  as  a 
source  of  income.  For  a  variety  of  reasons  the 
farmers  of  the  great  agricultural  sections  planted 
an  unusually  large  acreage  to  potatoes.  The  sea- 
son was  favorable  and  the  product  was  so  abundant 
that  the  usual  result  followed.  The  market  was 
glutted  and  the  prices  went  down  to  so  low  a  figure 
that  many  found  it  more  profitable  to  feed  their 
surplus  to  their  stock  than  to  carry  it  to  market 
and  take  chances.  In  New  Hampshire  potatoes 
sold  for  fifteen  cents  a  bushel.  Jn  Western  Massa- 
chusetts they  went  down  as  low  as  ten  cents,  not 
in  a  few  isolated  cases  but  in  sufficient  quantities 
to  make  that  the  price  for  a  time.  A  farmer  near 
Westfield  took  thirty  bushels  of  potatoes  to  market, 
which  he  sold  for  $3  and  invested  the  proceeds  in 
a  pair  of  shoes.  For  this  reason  he  is  going  to  vote 
for  free  silver,  not  realizing  that  supply  and 
demand  are  the  arbiters  of  prices,  and  that  he  was 
the  victim  of  a  natural  law,  whose  operation  cannot 
be  controlled  by  any  policy  of  parties  or  govern- 
ment." 


l6l.   THE   CASE   OF  COTTON. 

If  we  look  at  the  case  of  cotton,  once  the  surest 
wealth-winning  product  of  American  soil,  we  can 
most  readily  see  that  the  inexorable  law  of  supply 
and  demand,  without  any  reference  to  questions  of 
money,  has  carried  prices  down,  or  down  and  up, 
according  to  circumstances.  Cotton  may  easily  rise 
in  supply  from  America  alone  so  much  above  the 
demand  as  to  put  the  price  too  low  to  give  the 
grower  any  profit.  Cotton  has  heaped  America 
with  wealth  since  Eli  Whitney's  invention  of  the 
cotton  gin,  and  yet  we  at  last  saw  in  the  crop 
of  1894,  which  was  fifty  per  cent,  larger  than  any 
crop  prior  to  1887,  a  crop  so  much  beyond  the 
world's  demand  as  to  almost  abolish  profit. 

162.   WHEAT  PRICES. 

Wheat  necessarily  goes  down  in  price  in  conse- 
quence of  the  enormously  rapid  increase  of  wheat- 
growing  throughout  the  world,  and  the  correspond- 
ing rapid  development  of  transportation  facilities 
for  carrying  this  wheat  to  market.  The  increase 
of  production  of  wheat  in  the  United  States  alone 
has  been  from  292,136,000  bushels  in  i875to6n,- 
780,000  bushels  in  1891 ;  and  even  in  1895,  with  a 
partial  failure  of  the  crop,  467, 100,000  bushels. 
The  acreage  of  wheat  increased  fifty  per  cent,  from 
1875  to  1891;  from  26,318,512  to  39,916,897  acres. 
The  simultaneous  advances  made  in  the  production 
of  all  the  chief  crops  gives  more  than  full  measure 
of  supply  to  the  demands  of  mankind.  Corn  in  the 
United  States  went  from  34,091,137  acres  in  1871 
to  76,204,515  acres  in  1891;  an  advance  of  124  per 


177 

cent. ;  and  in  1895  the  yield  of  corn  was  more  than 
double  that  of  any  year  prior  to  1875.  In  the  same 
way  both  the  acreage  and  the  average  annual  yield 
of  oats  have  doubled  since  1871.  And  over  and 
above  these  American  advances,  such  countries  as 
Russia,  India,  and  Argentina  in  South  America, 
have  sent  immense  quantities  of  their  products  to 
compete  for  a  large  share  of  the  supply  of  the 
demands  of  the  world.  That  changes  such  as  these 
have  worked  the  fall  of  prices  of  farming  products, 
with  no  reference  whatever  to  the  gold  standard, 
is  shown  by  the  fact  that  under  gold  from  1840  to 
1890  all  the  principal  farm  products  rose  in  price; 
as  barley  from  62  cents  to  95,  corn  from  38  to  58, 
oats  from  20  to  58,  rye  from  68  to  97,  and  wheat 
from  38  to  $1.03.  As  at  the  same  time,  from  1840  to 
1890,  the  average  wages  of  all  occupations  have 
more  than  doubled,  and  since  1860  have  increased 
over  75  per  cent.,  all  under  gold,  the  whole  effect 
upon  prices  does  not  seem  a  matter  for  complaint. 

163.    WHOLLY   FALSE   CLAIM   THAT  APPRECIATION   OF 
GOLD    SINCE    1873    NOW   INJURES   DEBTORS. 

In  connection  with  what  is  said  of  prices,  it  is  also 
said  that  the  burden  of  mortgages  and  of  all 
national  and  State  indebtedness  has  been  increased 
by  giving  gold  the  position  of  standard  money. 
This  is  said  to  have  caused  gold  to  appreciate  in 
value,  thus  causing  "the  dollar  of  account,"  or 
standard  dollar  in  which  debts  must  be  counted 
when  paid,  to  be  worth  a  good  deal  more  than  the 
value  represented  by  a  dollar  when  the  debts  were 
incurred. 

12 


178 

It  is  but  too  easy  to  form  a  wrong  impression 
that  gold  has  appreciated  in  value.  In  the  year 
1810,  when  England  was  on  a  paper  basis,  and  gold 
was  at  a  premium  of  15  per  cent.,  the  governor  of 
the  Bank  of  England,  and  other  financial  experts, 
insisted  on  the  opinion  that  gold  had  appreciated, 
and  that  bank  notes  had  not  depreciated.  A 
majority  of  the  merchants  and  statesmen  of  the  day 
also  took  this  ground  with  confidence.  To  settle 
the  question  Parliament  appointed  a  committee  to 
make  the  most  thorough  examination  possible,  and 
the  conclusions  of  this  committee,  published  in 
what  is  known  as  the  "Bullion  Report,"  made  it 
plain  beyond  all  question  that  the  paper  currency, 
because  of  its  excessive  amount,  had  depreciated, 
and  that  gold  had  not  appreciated.  The  plausible 
opinion  of  merchants,  statesmen,  and  financiers 
was  proved  to  have  been  wrong. 

The  double  answer  to  the  claim  that  appreciation 
of  gold  now  injures  debtors  is  this : 

(1)  No  proof  whatever  that  gold  has  appreciated 
to  any  particular  extent,  has  been  or  can  be  given, 
except  the  fact  that  a  larger  amount  of  the  things 
of  value  to  man  can  be  obtained  with  it  now  than 
could  have  been  obtained  twenty  years  ago ;  and 

(2)  This  fact  of  low  prices  only  includes  things 
which  are  cheap  in  consequence  of  abundant  supply 
and  competition    in    trade,  and  does  not  include 
labor,  the  wages  of  which  are  higher  instead  of 
lower;    thus  giving  a  situation  which  is  broadly 
advantageous,   even  to  the   debtor   class;    which, 
moreover,  has  not  been  created  by  the  gold  stan- 
dard ;  and  which  can  be  helped,  so  far  as  may  be 


179 

necessary,  by  measures  of  tariff  calculated  to  get 
still  more  of  low  prices  for  the  farmer,  the  rancher, 
and  the  miner. 

Mr.  David  A.  Wells,  in  a  work  of  great  interest 
and  importance,  on  " Recent  Economic  Changes," 
traces  very  carefully  the  decline  in  prices  of  staple 
articles  which  has  actually  taken  place  since  1873, 
and  shows  that  the  progress  of  invention,  improve- 
ments  in  manufacture,  greatly  lessened  cost  of  trans- 
portation, and  other  known  conditions  of  supply 
and  demand,  have  done  all  the  actual  cheapening 
of  goods,  precisely  as  would  have  been  the  case  if 
the  gold  standard  had  not  existed. 

164.  APPRECIATION  OF  GOLD  DESIRABLE. 

If  it  be  true,  not  merely  that  silver  has  depreci- 
ated precisely  as  copper  has  done,  through  the 
operation  of  the  conditions  of  production,  but  that 
gold,  apart  from  any  effect  of  the  conditions  of  pro- 
duction, and  in  consequence  of  the  place  given  it, 
whether  as  money  above  all  other  and  the  sole 
standard  of  value,  or  as  a  precious  metal  for  use  in 
the  arts,  has  appreciated,  the  fact  of  such  apprecia- 
tion, cannot  be  regarded,  in  any  light  whatever  in 
which  it  can  be  viewed,  as  other  than  an  uplift  of 
wealth  and  prosperity  for  mankind ;  a  fact  of  uni- 
versal advantage,  a  benefit  and  not  an  injury  to  all 
concerned. 

165.   GOLD  THE  SUPREME  COMMODITY. 

If  the  whole  mass  of  gold  in  the  world  should 
appreciate  one  per  cent,  every  year  for  twenty 
years,  the  chief  result  would  be  an  addition  of  one- 


i8o 

fifth  to  the  value  of  this  mass  of  property,  and  it 
would  be  just  as  much,  and  just  the  same,  a  benefit 
as  a  corresponding  rise  of  value  in  land.  There  is 
no  more  reason  why  gold  should  not  appreciate  to 
universal  advantage  than  there  is  why  land  should 
not  appreciate  to  universal  advantage.  What  we 
justly  regard  as  universal  advantage  may,  indeed, 
in  the  case  of  rise  in  the  value  of  land,  work  to  the 
greatest  advantage  for  some,  to  the  least  advantage 
for  others,  and  to  more  or  less  disadvantage  to 
others,  but  this  does  not  alter  the  general  fact  of 
universal  advantage.  It  is  precisely  the  same  in 
the  case  of  gold,  nor  does  the  particular  case  of 
serious  disadvantage  to  debtors  from  having  to  pay 
in  appreciated  gold  value  warrant  thinking  the 
appreciation  of  gold  not  a  universal  advantage. 

l66.    DEBTORS   NOT   HURT   BY  GOLD. 

In  every  respect  except  the  single  one  of  payment 
of  debt  the  debtor  will  reap  benefit,  and  if  he 
loses  something  in  respect  of  his  position  as  a 
debtor,  there  are  four  things  to  be  said  about  it,  — 
first,  that  his  loss  falls  as  one  of  those  chances 
which  fall  widely  and  in  great  number,  on  the  just 
and  the  unjust  alike;  second,  that  with  the  excep- 
tional slowness  and  steadiness  with  which  the  value 
of  gold  has  ever  moved,  or, -apparently,  ever  can 
move,  no  great  change,  up  or  down,  can  take  place 
within  the  life  of  a  common  debt ;  third,  that,  with 
the  perfection  of  knowledge  and  justice  among  men 
provision  may  undoubtedly  be  made  against  any- 
thing like  injustice  to  debtors  in  the  matter  of  pay- 
ment in  gold  largely  appreciated  in  value,  —  and, 


iSi 

fourth,  that  mankind  at  large  would  be  immensely 
advantaged  rather  than  otherwise  if  it  came  to  be 
understood  that  all  debts  running  for  periods  of 
years  involved  the  almost  certain  peril  of  payment 
in  gold  value  considerably  appreciated;  as  either 
interest  charges  on  such  debts  would  be  lower,  or 
the  peril  would  deter  from  contracting  the  debts. 
There  are,  in  short,  no  considerations  tending  to 
show  that  appreciation  of  gold  is  not  as  much  to 
be  desired  as  any  other  rise  in  value  of  property, 
even  if  it  is  somewhat  to  the  disadvantage  of  debt- 
ors, unless  they  are  on  the  guard  against  it.  If 
appreciation  takes  place  slowly  and  steadily,  and 
serious  fluctuation  in  value  does  not  occur,  now 
suddenly  up  and  again  suddenly  down,  then  may 
gold  remain  all  that  it  has  ever  been  as  the  supreme 
commodity  of  the  word,  serving,  by  its  high  and 
steady  value,  as  a  standard  of  value  far  better  than 
any  other. 

167.  GOLD  THE  SUPREME  SERVANT. 

In  the  services  which  gold  renders  other  than 
that  of  a  supreme  commodity  and  standard  of  value 
it  is  the  supreme  servant  of  all  men,  from  the  high- 
est to  the  lowest,  and  by  so  much  as  it  appreciates 
in  value  it  can  render  services  which  are  by  so 
much  the  better  as  the  appreciation  is  greater.  In, 
for  example,  the  matter  of  prices,  the  appreciation 
of  the  standard  of  value  tends  to  make  the  necessi- 
ties and  comforts  of  life  figure  lower  than  they 
otherwise  would,  even  if  they  are  not  absolutely 
any  lower,  while  wages  are  not  to  the  same  extent 
carried  down,  not  only  because  efforts  to  prevent 


182 

this  are  made  to  the  utmost,  but  because  the  greater 
wealth  of  the  world  makes  the  payment  of  rela- 
tively higher  wages  practicable.  Depreciated 
money  causes  a  rise  in  the  prices  of  commodities, 
without  anything  like  a  corresponding  rise  of 
wages,  and  thus  injures  all  wage-earners  so  far  as 
they  are  purchasers  of  common  commodities, 
because  they  fail  to  gain  in  wages  enough  to  meet 
what  they  must  give  more  than  before  for  comforts 
and  necessities.  To  just  the  contrary  effect  appre- 
ciated money  will  tell  for  the  broad  and  deep  bene- 
fit of  the  wage-earning  and  commodity-purchasing 
mass  of  mankind,  and  by  so  much  as  gold  may 
slowly  and  steadily  appreciate,  as  the  ages  of  human 
progress  roll  by,  by  so  much  will  the  average  of 
human  welfare  experience  and  uplift  altogether 
beneficent. 

168.    USE     OF     METALS   AS   MONEY     DOES    NOT  CAUSE 
APPRECIATION. 

It  is  a  very  ignorant  and  false  notion  that  the 
more  or  less  use  of  gold  as  money,  or  the  place 
given  it  as  the  standard  of  value,  materially  affects 
its  commercial  value  in  the  markets  of  the  world. 
That  value  is  in  any  case  so  high,  that  it  does  not 
make  the  slightest  difference  whether  gold  has  the 
standard  position  or  whether  silver  is  the  standard 
and  gold  is  current  at  a  commercial  rate  per  ounce. 
If  it  is  not  coined,  issued,  and  counted  as  money,  it 
will  none  the  less  figure  in  trade  precisely  as  money 
does,  and  hold  its  place  and  value  just  as  well  as  if 
recognized  by  mintage  and  issue. 

The  foundation  and  stay  of  all  good  money  of 


183 

account,  all  real  and  sure  money,  is  the  commercial 
value  of  the  metal.  No  matter  how  much  silver 
may  be  given  place  and  name  as  standard  and  legal 
tender,  its  only  sure  foundation  and  firm  stay  is 
the  commercial  value  of  the  metal ;  and  that  will 
be  counted  in  gold,  even  if  gold  is  not  recognized 
as  money,  for  the  simple  reason  that  people  can 
count  in  gold  more  easily  and  surely  than  they  can 
in  silver,  because  gold  values  are  so  much  more  un- 
changing, or  but  slowly  changing,  than  silver  values. 

169.   PRICE   OF    SILVER   NOT    AFFECTED   BY   USE  AS 
MONEY. 

It  does  not  really  help  the  price  of  silver  even, 
much  less  does  it  affect  that  of  gold,  to  employ 
either  the  one  or  the  other  as  money.  Whatever 
may  happen  contrary  to  the  view  thus  taken  is 
abnormal  and  transient,  just  as  an  abnormal  and 
transient  acceptance,  even  at  full  value,  may  be  at 
first  given  to  paper  money  under  which  there  is  no 
secure  basis,  and  the  due  course  of  which  will  be 
down  to  no  value  at  all. 

It  did  nothing  whatever  for  the  price  of  silver 
that  it  was  standard  money  by  legal  fiction  from 
1792  to  1873.  The  hucksters  of  worthless  finance, 
trading  on  the  distress  and  the  credulity  of  the 
ignorant,  put  forward  the  false  pretence  of  money 
of  the  fathers  of  the  Constitution,  meaning  silver 
money  along  with  gold,  and  proclaim,  with  extra- 
ordinary indifference  to  truth,  that  silver  is  fallen 
one-half  from  what  its  market  value  would  be  if 
we  had  again  the  money  of  the  Constitution  and  of 
the  fathers.  The  simple  fact  is  that  the  fathers 


1 84 

and  the  times  of  the  Constitution  saw  no  silver 
money  and  yet  saw  the  price  of  silver  high.  It  is 
not  less  the  fact  that  our  times  have  seen  a  vast 
flood  of  silver  money,  yet  have  not  seen  in  conse- 
quence any  check  to  the  steady  decline  of  the  price 
of  silver. 

From  1805  to  1835  not  a  single  silver  dollar  was 
coined,  yet  the  commercial  ratio,  which  was  15.79 
in  1805,  was  only  changed  to  15.80,  one-tenth  of  a 
cent,  in  1835 ;  and  it  ruled  as  good,  or  better  than 
this,  down  to  1874,  although  the  average  coinage 
per  year  was  only  $173,466,  and  the  total  for  the 
thirty-eight  years,  —  1836  to  1873,  —  was  only 
$6,591,721.  During  eighty  years  from  the  founda- 
tion of  our  government  the  price  of  silver  never 
fell  below  $1.29  per  ounce,  although  the  average 
coinage  was  only  $100,353  eac^  year.  The  price 
did  not  fall  in  the  no-coinage  period  of  thirty  years, 
1805-1835,  nor  did  it  rise  in  the  coinage  period  of 
thirty-eight  years  before  1874. 

Use  as  money,  or  disuse  as  money,  had  no  effect 
upon  the  price.  And  after  the  increase  in  produc- 
tion of  silver  began,  about  1876,  to  carry  the  price 
down,  steadily  and  surely,  no  amount  of  American 
coinage  had  any  real  effect  to  stay  that  decline. 
The  coinage  from  1878  to  1896,  amounting  to 
$430,790,041,  an  average  each  year  of  $23,285,948, 
did  not,  and  could  not,  materially  affect  the  decline. 
Coinage,  issue,  and  circulation  (or  storage  securing 
paper  in  circulation),  does  not  use  up,  and  take  out 
of  reach  as  a  commodity,  the  metal  so  dealt  with, 
but  leaves  it  on  the  market,  the  same  exactly  as  if 
it  were  not  coined. 


170.    MARKET  PRICE  NOT    MADE  BY  MONEY  USE. 

It  is,  therefore,  futile  to  a  degree  to  count  use  of 
a  metal  as  money  as  of  advantage  td  its  market 
price.  Gold  cannot  materially  appreciate  from  any 
use  as  money;  nor  can  silver  depreciate  because 
not  used  as  money,  or  because  of  the  large  use  of 
gold  as  money.  And  the  difference  made  by  hav- 
ing gold  only  as  the  money  of  account,  and  silver 
as  merely  subsidiary  money;  gold  as  standard 
money  of  full  intrinsic  value,  and  silver  as  second- 
ary money,  upon  a  parity  with  gold  one-tenth  fiat, 
or  credit  of  the  government,  and  nine-tenths 
intrinsic  value ;  could  not  in  the  smallest  degree 
affect  the  market  values  of  either  gold  or  silver. 

I/I.   HOODLUM  AND   RASCAL   FINANCE. 

The  ignorance  is  simply  monstrous,  and  the  aims 
terribly  mischievous,  of  the  anarchistic  revolution 
represented  by  advocacy  of  free  silver  as  a  means 
of  levelling  up  the  values  of  silver  and  of  farm 
products  to  the  present  value  of  gold,  or  to  the 
value  of  gold  properly  brought  down  to  a  midway 
level.  If  by  lies  working  delusion,  and  by  criminal 
violence  to  the  rights  of  the  moneyed  class,  any- 
thing whatever  could  be  got  for  the  victims  of  pov- 
erty and  debt,  a  cyclone  of  hoodlumism  in  finance 
might  leave  somebody  benefited,  even  if  at  the 
cost  of  general  injury.  But  no  one,  neither  the 
unfortunate  debtor,  nor  the  unhappy  farmer,  nor 
the  owners  of  silver,  can  derive  any  degree  or  kind 
of  benefit  from  the  wild  and  wicked  delusion  that 
making  or  unmaking  money,  silver  or  gold  or 


1 86 

paper,  can  at  all  affect  the  values  of  silver  and  farm 
products,  to  lift  them  up,  or  that  of  gold,  to  bring 
it  down. 

172.   THE   FOUNDATION   OF   PROSPERITY. 

The  one  fact  that  ages  of  bitter  experience,  and 
of  slowly  and  painfully  gained  knowledge,  bear 
witness  to,  is  the  immense  mischief  and  monstrous 
wrong,  first  of  having  a  standard  of  value  which  is 
in  any  degree  a  fiat  lie,  and  second  of  changing  the 
standard  away  from  real  value  to  fiat  and  false 
value.  Silver  has  given  place  to  gold,  not  from 
any  unfair  advantage  enjoyed  by  gold,  for  the 
advantage  at  first  and  for  a  long  time  was  with  sil- 
ver, but  solely  because  silver  was  so  often  found 
to  fail,  where  gold  upon  trial  was  found  to  be 
greatly  superior.  Gold  has  come  to  the  place  of 
supreme  property,  supreme  standard  of  value,  and 
supreme  service  of  all  human  interests,  solely  in 
consequence  of  merits  universally  demonstrated 
and  benefits  universally  rendered.  A  crusade  of 
ignorance  and  madness  against  gold  cannot  but  tell 
with  far  the  most  terrible  effect  in  injury  to  the 
needy,  the  depressed,  the  debtor  class. 

173.    ENTIRELY   FALSE   IDEA   THAT   GOLD   HAS 
APPRECIATED. 

It  would  be  difficult  to  hang  a  cause  of  any  impor- 
tance on  an  assumption  more  thoroughly  mistaken 
and  false  than  that  of  the  appreciation  of  gold,  and 
of  the  effect  of  adopting  gold  as  the  standard  of 
the  monetary  system  everywhere  to  make  gold 


appreciate  more  and  more.  The  further  assump- 
tion that  such  appreciation  of  gold,  by  putting 
larger  value  under  money  figures,  and  thus  lower- 
ing the  figures  of  prices,  can  be  detrimental  in  any 
way  to  any  of  the  parties  to  exchange  of  values  in 
trade,  is  totally  baseless,  the  merest  blunder  of 
ignorant  thinking.  One  of  the  surest  principles  of 
monetary  science  is  the  advantage,  rather  than  the 
contrary,  to  all  concerned,  or  rather  the  more  sure 
justice  to  all  concerned,  and  the  more  equal  advan- 
tage of  all,  of  appreciation  of  the  value  covered  by 
a  money  figure,  and  the  consequent  tendency  to 
lower  prices  in  the  exchanges  of  trade,  that  is, 
values  nominally  lower  while  not  in  reality  altered 
at  all. 

But  whatever  may  be  the  truth  and  the  import- 
ance of  the  law  of  lower  prices  in  proportion  as 
values  under  money  figures  are  greater,  the  con- 
tention warranted  by  every  consideration  bearing 
upon  the  point  is  that  the  values  under  the  figures 
of  gold  money  are  not  as  great  as  they  were  thirty 
to  fifty  years  ago,  but  are  distinctly  and  consider- 
ably lower.  It  is  not,  indeed,  as  easy  as  many  cur- 
rent statements  assume  to  know  where  we  are  at  in 
our  gold  values.  We  cannot,  for  example,  say  that 
if  the  present  rate  of  interest  is  only  one-half  what 
it  was  thirty  years  ago,  and  if  the  rate  of  payment 
of  wages  to  labor  is  double  what  it  was  a  genera- 
tion since,  therefore  gold  is  worth  only  half  what 
it  was  in  1860  or  1870.  The  problem  has  too  many 
conditions  to  be  of  so  simple  a  solution,  and  some 
of  them  forbid  thinking  that  gold  values  have  fallen 
one-half  in  thirty  or  forty  years.  But  we  may 


i88 

safely  reason  from  the  facts,  as  to  the  rate  of  inter- 
est and  the  wages  of  labor,  that  gold  values  are 
distinctly  lower,  even  if  not  very  much  lower.  The 
immensely  increased  production  of  gold  would 
naturally  carry  down  the  price,  or  tend  to  carry  it 
down,  but  against  this  is  to  be  put  the  fact  which 
weighs  more  than  all  others,  the  extent  to  which 
the  uses  of  gold  have  kept  pace  with  the  supply. 
But  this  must  be  considered  in  connection  with  the 
fact  that  the  more  the  gold  standard  prevails  every- 
where, the  less  will  gold  be  actually  handled  in 
settling  exchanges,  so  that  there  cannot  be  any 
danger  that  hunger  of  the  money  marts  all  over 
the  globe  will  carry  up,  or  even  upon  the  whole 
rigidly  hold  up  the  value  of  gold.  It  will  remain  a 
very  slightly,  very  evenly,  and  very  steadily  declin- 
ing value. 

174.   THE   CAUSE   OF   HARD   TIMES. 

Apart  from  what  would  be  not  more  than  the 
average  of  current  distress,  the  cause  of  hard  times, 
for  the  years  1893-1896,  was  far  more  the  appear- 
ance in  the  high  places  of  the  nation  of  hoodlum 
and  rascal  ideas  of  gold  and  of  relations  with 
England,  than  any  real  failure  of  the  conditions  of 
prosperity  among  the  people.  England  is  very 
largely  an  invaluable  dependence  for  us  for  borrow- 
ing at  low  interest  vast  sums  of  money  which 
we  can  use  to  great  advantage  in  developing  Ameri- 
can possibilities.  Every  million  of  gold  which  we 
can  borrow  from  England  is  equal  to  five  or  six 
millions  of  American  development.  A  hundred 
millions  of  English  gold  wisely  handled  and  hon- 


1 89 

estly  held,  would  count  from  six  hundred  to  a 
thousand  millions  of  American  development.  It  is 
our  interest  to  bring  English  gold  here  and  to  keep 
it  here,  which  alone  demands  consideration.  We 
have  no  greater  interest  of  a  financial  kind.  It  is 
precisely  as  if  groups  of  sons  going  far  west,  from 
the  seats  of  accumulated  wealth  on  the  Atlantic, 
turned  back  to  the  ancestral  homes  to  borrow  capi- 
tal needed  for  developing  new  seats  of  wealth  and 
prosperity.  Nothing  could  be  more  natural ;  noth- 
ing more  beneficial ;  nothing  less  open  to  carping 
criticism  on  the  part  of  Americans,  as  though  such 
dependence  upon  England  could  be  in  any  light 
open  to  American  objection. 

175.   FALSE   "AMERICAN   INDEPENDENCE." 

It  is  only  the  shyster  in  monetary  politics  who 
can  masquerade  at  this  day  in  protestations  of 
American  independence  of  Europe,  and  patriotic 
indifference  in  New  York  and  Chicago  to  London 
and  Paris  and  Berlin.  The  honest  hoodlum  of  the 
backwoods  and  the  mining  camp,  elevated  by  the 
chance  of  circumstances  to  some  office  or  some  can- 
didacy, might  perhaps  suppose  himself  thinking 
according  to  knowledge  and  judgment,  and  not 
according  to  ignorance  and  madness,  in  proposing 
that  the  United  States  undertake  a  monetary  policy 
of  isolation  and  separatism.  But  the  hoodlum  must 
develop  into  a  pronounced  shyster,*  if  not  a  hire- 


*"  Shyster:  One  who  does  business  trickily;  a  person  without 
professional  honor:  used  chiefly  of  lawyers." — "  The  Century 
Dictionary." 


190 

ling  of  criminal  politics,  to  deliberately  argue,  in 
the  full  light  of  existing  commercial  conditions,  for 
American  defiance  of  the  demands  of  the  universal 
commercial  system,  which  makes  New  York  as 
much  one  with  London  as  if  the  Atlantic  ocean 
were  not  wider  than  an  easily  bridged  river. 

In  earlier  times,  and  in  countries  not  at  all  in 
touch  with  the  general  progress  of  mankind,  gov- 
ernments could  shape  commercial  and  monetary 
conditions  in  disregard  of  the  rest  of  the  world, 
but  even  China  cannot  do  that  now.  The  wish  to 
do  it,  the  thought  that  it  can  be  done,  the  argument 
attempted  that  it  ought  to  be  done,  indicate  an 
almost  infamous  blindness  to  the  universal  light 
everywhere  directing  human  progress.  The  sim- 
ple fact  is  that  America  hires  money  in  London  as 
a  matter  of  profit  to  herself,  and  complies  with  the 
conditions  of  the  London  money  market  solely  in 
her  own  interest,  for  what  she  can  make  out  of  it. 
The  money  is  there  on  hire,  and  more  dependent 
on  a  chance  to  be  hired  than  we  are  on  the  chance 
to  hire  it.  It  is  gold  solely  because  that  is  the  best 
money,  and  the  best  for  us  even  more  than  it  is 
the  best  for  its  owners.  The  main  condition 
imposed  by  those  who  have  large  store  of  gold 
on  hire  in  London  is  that  we  do  not  by  any 
trick  try  to  steal  it.  It  is  to  our  advantage  far 
more  than  to  any  other  that  we  comply  with 
this  condition,  no  matter  what  it  may  at  some 
moments  cost  us.  The  injury  to  English  gold 
interests  is  slight  compared  with  the  injury  to 
universal  American  interests  of  the  scoundrelism 
in  finance  which  can  deliberately  suggest  that 


patriotism  express  itself  in  dishonor  and  fraud, 
because  the  victims  are  English,  and  because  some 
letter  of  law  or  some  plea  of  policy  can  be  alleged 
for  doing  it.  The  resolution  which  passed  the 
Senate  of  the  United  States  January  25,  1878,  on 
the  proposal  of  Senator  Matthews  of  Ohio,  and  by 
a  vote  of  43  to  22,  and  which  passed  the  House 
by  a  vote  of  189  to  79,  was  not  only  one  of  the 
most  senseless  plunges  into  an  abyss  of  dishonor 
ever  made,  but  it  was  a  wild  and  wicked  sacrifice 
of  American  interests,  on  the  flimsy  plea  of  tech- 
nical legal  liberty  to  allege  our  right  to  construe 
"coin"  as  meaning  fiat  coin  of  silver  equally  with 
gold  coin  of  account.  The  application  of  intelli- 
gence in  finance,  not  to  mention  honesty,  would 
have  shown  that  "coin,"  in  an  unqualified  absolute 
promise  to  pay,  must  mean  the  gold  coin  of  account 
and  could  not  by  any  light,  or  any  hoodlum  and 
rascal  exclusion  of  light,  mean  fiat  silver  coin, 
whose  honest  quality  was  solely  in  the  promise  it 
carried  of  exchangeability  for  gold.  But  whatever 
the  right  to  read  "coin"  as  meaning  silver  equally 
with  gold,  the  proclamation  of  this  right  was  a 
most  senseless  and  wanton  destruction  of  American 
interests,  which  would  have  been  enormously 
greater  had  not  the  inflexible  honesty  of  the  Secre- 
tary of  the  Treasury,  Hon.  John  Sherman,  inter- 
posed with  the  explanation  that  "coin"  would  be 
understood  to  mean  gold. 

176.    ANTI  ENGLISH   FANATICISM. 

One   of  the   craziest   expositors    of    anarchistic 
Americanism,  Mr.  J.  P,  Altgeld,  whose  position, 


192 

as  Governor  of  the  great  State  of  Illinois,  proved 
an  appalling  revelation  of  what  may  befall  in 
American  politics,  alleged  in  a  speech  of  August 
29,  1896,  that  the  great  money  center  of  the  world 
now  is  London,  that  the  large  financiers  of  New 
York  not  only  act  on  the  suggestions  but  follow  the 
dictation  of  the  London  bankers,  and  that  similarly 
the  bankers  elsewhere  in  America  follow  the  dicta- 
tion of  a  few  New  York  bankers,  although  it  com- 
pels them  to  "take  a  position  which  is  against  the 
interests  of  the  community  in  which  they  live  and 
do  business. ' '  In  Mr.  Altgeld's  view  the  American 
bankers  "are  ready  to  either  blindly  follow  the 
cruel  dictates  of  the  gold  men  or  are  hopelessly  in 
the  clutches  of  what  is  called  the  'eastern  money 
power.'  '  And  further  Mr.  Altgeld  represents 
that  the  English  money  power  is  conducting  a 
campaign  in  this  country,  is  seeking  to  fasten  upon 
the  people  of  this  country  an  English  yoke,  to 
install  English  Shylocks  as  task-masters  over  all 
the  generations  of  Americans  that  are  yet  to  come, 
and  that  the  experiment  of  trying  to  force  the 
nations  of  the  earth  on  to  a  gold  basis  for  the  bene- 
fit of  European  creditors  is  ruining  the  American 
people.  And  to  meet  this  terrible  situation  Mr. 
Altgeld  insists  that  we  make  cheap  half -value  dol- 
lars, and  "payback  the  English  creditors,  principal 
and  interest,  in  the  same  money  exactly  which  they 
gave  us,  dollars  that  shall  have  the  same  purchas- 
ing power,  that  will  buy  as  much  property  and  as 
much  labor  of  every  kind,  as  the  dollars  which  they 
gave  us." 


193 

I//-   ANARCHIST   RAVINGS. 

The  wildest  possible  honest  misrepresentation  of 
facts  hardly  suffices  to  explain  such  a  picture  as  this. 
There  seems  to  lie  behind  in  the  mind  of  the  author 
of  the  picture  a  sort  of  madhouse  fury  completely 
incapacitating  for  taking  note  of  reason  or  truth, 
destroying  all  conscience  of  justice,  and  yielding 
ravings  hardly  to  be  distinguished  from  those  of 
complete  insanity.  The  system  of  banking  which 
governs  American  relations  with  London  is  as  hon- 
est and  beneficent  as  any  organic  product  of  human 
progress ;  the  gold  standard  has  come  everywhere 
throughout  the  world,  or  is  coming,  solely  in  con- 
sequence of  its  recognized  and  demonstrated  advan- 
tages, its  greater  honesty  and  beneficence;  the 
borrowing  for  America  of  English  gold,  and  the 
creation  and  maintenance  of  close  monetary  rela- 
tions between  London  and  New  York  and  Chicago, 
have  had  no  motive  and  no  result  other  than  that 
of  carrying  London  advantages  of  capital  as  widely 
as  possible  throughout  the  whole  vast  wilderness 
of  American  needs  and  opportunities ;  and  the  only 
thing  which  has  prevented  continuous  and  steadily 
increasing  benefit  to  America  from  financial  ties  to 
London,  has  been  an  Americanism  of  bastard  type, 
restlessly  malignant  towards  England,  and  miser- 
ably ignorant,  and  even  dishonest,  in  matters  of 
national  finance.  The  chapter  of  ignorance  has 
alone  cost  us  a  thousand  millions,  and  one  of  dis- 
honor and  dishonesty  would  cost  us  twice  as  much, 
more. 

13 


i94 

178.   FALSIFICATION   OF    FACTS. 

The  Altgeld  theory  is  that  "if  the  present  stand- 
ard is  to  be  maintained,  if  our  people  must  go  on 
paying  interest  and  principal  in  dollars  that  require 
twice  as  much  sweat,  twice  as  much  blood  to  obtain, 
as  did  the  dollars  that  were  in  circulation  when  the 
debts  were  created,  then  the  doom  of  American 
producers  is  sealed ;  low  prices  will  be  made  per- 
petual and  there  will  be  no  hope  for  the  American 
farmer,  the  American  mechanic,  or  the  American 
laborer." 

The  falsification  here  could  not  be  greater. 
There  is  no  more  incontestable  fact  than  the  very 
considerable  rise  in  wages  in  recent  times.  The 
dollar  now  paid  in  wages  does  not  require  as  much 
labor  as  the  older  dollar  did.  The  assertion  that 
it  requires  twice  as  much  is  mendacity  run  mad. 
And  hardly  less  must  be  said  of  the  expectation 
that  American  laborers,  mechanics,  and  farmers, 
will  be  ruined  unless  the  prices  of  whatever  they 
have  to  buy  are  doubled.  Low  prices  of  every- 
thing except  their  labor  are  the  greatest  benefit  to 
them.  Even  to  the  farmer,  whatever  he  may  lose 
by  low  prices  of  his  products,  he  gains  enormously 
by  low  prices  of  everything  for  which  he  has  to  pay 
money.  These  facts  are  so  plain,  their  meaning  is 
so  clear,  and  they  so  completely  put  the  brand  of 
gross  falsification  upon  Mr.  Altgeld' s  allegations, 
as  to  leave  us  no  alternative  but  to  presume  that 
stump  speaking  on  the  Altgeld  plan  imposes  no 
restraint  upon  useful  falsification. 


195 

MENDACIOUS   COMPLAINT  AGAINST   GOLD    AND 
BANKS. 

In  justification  of  his  proposal  to  pay  "our  Eng- 
lish creditors"  in  half -value  dollars,  Mr.  Altgeld 
brings  against  them  this  charge : 

"We  say  that  their  act  in  getting  silver  demone- 
tized and  gold  made  dear,  after  they  had  succeeded 
in  getting  our  bonds  and  our  notes,  so  as  to  compel 
us  to  pay  in  a  different  kind  of  money  from  what 
they  gave  us,  dollars  which  cost  twice  as  much, 
was  a  fraud  and  a  crime  against  civilization." 

"The  moneyed  classes  of  Europe,"  Mr.  Altgeld 
says,  "conceived  the  idea  that  it  would  be  to  their 
interest  to  make  money  dear  and  property  and 
labor  cheap."  The  execution  of  this  fell  purpose 
by  "the  London  bond  holders,"  proceeded,  accord- 
ing to  Mr.  Altgeld,  as  follows: 

"In  1873  they  got  our  government  to  by  law 
demonetize  silver,  stop  its  coinage,  deprive  it  of  its 
legal  tender  functions  and  reduce  it  practically  to 
the  basis  of  token  money,  and  between  that  year 
and  1880  they  got  nearly  all  of  the  governments  to 
take  similar  steps,  so  that  silver  was  no  longer  a 
primary  or  redemption  money,  but  occupied  the 
place  practical^  of  token  money,  and  as  the  amount 
of  silver  dollars  in  the  world  was  just  about  equal 
to  the  amount  of  gold  dollars  in  the  world,  it  fol- 
lowed that  when  silver  was  demonetized  and  its 
coinage  was  stopped  thereafter  the  work  which  was 
formerly  done  by  gold  and  silver  together  had  to 
be  done  by  gold  alone.  The  number  of  people 
who  had  to  have  gold  was  doubled,  its  importance 
was  doubled  and  it  necessarily  followed  that  its 


196 

purchasing  power  was  doubled,  so  that  thereafter 
a  gold  dollar  would  buy  just  twice  the  amount  of 
products,  twice  the  amount  of  property,  twice  the 
amount  of  labor  that  it  formerly  did,  on  the 
average. 

"Formerly  there  was  added  every  year  to  the 
volume  of  money  that  existed  in  the  world,  not 
only  the  amount  of  gold  that  was  mined,  but  also 
the  amount  of  silver  that  was  mined,  less  what  was 
used  in  the  arts,  and  as  the  population  kept  increas- 
ing constantly,  and  as  it  was  necessary  that  the 
volume  of  money  should  be  enlarged  every  year  to 
keep  pace  with  the  increase  of  population  in  order 
that  prices  might  not  fall,  the  world  depended  upon 
the  increase  to  be  derived  from  both  metals  being 
about  equal  in  amount.  But  since  the  demonetiza- 
tion of  silver  there  is  added  each  year  only  the  gold 
that  is  produced,  less  what  is  used  in  the  arts.  In 
other  words,  the  annual  addition  now  to  the  stock 
of  money  is  only  half  what  it  used  to  be,  while  the 
annual  increase  in  population  is  much  greater  than 
it  used  to  be. 

"Who  are  the  men  who  profit  by  the  existing 
order  of  things?  Only  the  New  York  and  Euro- 
pean speculators  and  the  Englishmen  who  hold 
American  securities.  The  great  bondholding 
classes  of  Europe  now  find  that  one-half  of  the 
interest  on  their  bonds  will  buy  as  much  labor  and 
will  buy  as  much  property  as  all  of  it  used  to  buy. 
Silver  has  not  fallen.  It  occupies  the  same  relation 
to  property,  to  the  products  of  the  earth  and  to 
labor  that  it  formerly  did.  It  is  gold  that  has  gone 
up.  The  purchasing  power  of  gold  has  doubled 


i97 

and  our  people  are  obliged  to  pay  their  debts,  prin- 
cipal and  interest,  in  dollars  which,  as  a  matter  of 
fact,  are  2OO-cent  dollars/' 

If  this  amazing-  financial  screed  were  the  avowed 
product  of  a  disordered  mind  or  of  a  debate  among 
convicts  in  a  penitentiary,  the  hoodlumism  of  intel- 
lect which  marks  it  could  hardly  be  more  suprising. 
It  hardly  matters  whether  Mr.  Altgeld  makes  these 
statements  as  a  matter  of  disgraceful  ignorance  or 
of  graceless  mendacity,  the  falsifications  are  so 
obvious  and  so  absurd. 

The  total  silver  in  circulation  in  the  United  States 
in  1878  was  $65,780,545.  Five  years  later  the 
amount  had  risen  to  $160,436,865.  Ten  years  later 
(1888)  the  amount  was  $306,287,314;  and  another 
five  years  (1893)  carried  it  to  $448,919,176.  The 
gold  in  circulation  in  the  United  States  in  1878 
amounted  to  $109,637,454.  Ten  years  later  (1888)  it 
was  $511,954,224.  The  highest  mark  was  reached 
in  1892,  $550,003,079.  The  per  capita  of  silver  in 
circulation  in  1878  was  $1.83.  It  had  risen  to  $6.71 
in  1893.  The  per  capita  of  gold  in  1878  was  $2.30. 
It  had  risen  in  1892  to  $8.39.  The  total  money  in 
circulation  in  the  United  States  in  1873  was  $751,- 
881,809.  In  1883  it  was  $1,230,305,696.  In  1893 
$1,596,701,245  was  the  amount;  a  rise  of  the  per 
capita  from  $18.04  in  1873  to  $23.85  in  1893. 

During  the  sixteen  years,  1879-1894,  Great  Bri- 
tain, France,  and  Germany,  had  coined  $647,653,- 
321  of  gold,  and  $93,994,059  of  silver.  The  gold 
coinage  of  the  United  States  for  the  same  period 
had  been  $671,865,945  ;  and  its  silver  coinage  $430,- 
804,848.  The  sum  of  money  thus  coined  in  the 


I98 

sixteen  years,  1879-1894,  reached  the  enormous  total 
of  $1,319,518,266  in  gold  and  $524,798,907  in  silver. 
These  figures  give  the  lie  to  Mr.  Altgeld's  wild 
pretence  that  since  about  1880  the  supply  of  silver 
money  has  been  cut  off,  and  that  the  entire  supply 
of  money  has  been  reduced  one-half. 

1 8O.   FRANCE   AND   SILVER. 

The  story  of  silver  in  France  shows  how  little 
truth  there  is  in  the  pretence  that  injury  to  money 
has  been  done  by  injustice  to  silver.  From  1795  to 
1849  France  coined  $850,000,000  in  silver  to  $250,- 
000,000  in  gold.  It  might  have  been  expected  that 
in  silver  at  least  France  had  thus  secured  an  ample 
supply  of  money.  But  it  did  not  so  prove.  From 
1849  to  I865  the  new  production  of  gold  made  gold 
the  cheaper  money,  as  the  ratio  was  in  France, 
with  the  result  that  the  silver  coins  were  worth 
more  as  metal  than  as  coin,  and  hardly  any  of  them 
remained  in  circulation.  This  failure  of  silver  to 
circulate  as  money  entirely  changed  the  direction 
of  French  coinage,  and  from  1849  to  l8^5  France 
coined  $1,100,000,000  of  gold  and  only  $75,000,000 
of  silver.  In  1865-96  France  had  coined  about 
$400,000,000  of  gold,  and  $175,000,000  of  silver.  Of 
this  silver  over  $160,000,000  was  coined  prior  to 
1877.  The  world's  production  of  silver  increased 
so  fast,  and  the  price  fell  so  steadily,  as  to  make 
silver  a  dangerously  cheap  money.  France,  Bel. 
gium,  Italy,  and  Switzerland,  united  from  1865  in 
the  Latin  Union,  found  themselves  in  danger  of 
being  flooded  with  cheap  silver  money,  one  effect 
of  which  would  be  the  loss  of  all  their  gold  money, 


199 

as  at  an  earlier  time  France  had  lost  her  immense 
store  of  silver  money.  If  France  had  gone  on  with 
silver  the  effect  would  have  been  to  sell  out  her 
whole  stock  of  gold  at  an  enormous  loss,  and  with 
enormous  contraction  of  her  currenc)'.  Silver  had 
become  not  merely  a  monetary  failure,  but  a  mone- 
tary disaster,  and  suspension  of  silver  coinage  not 
only  did  not  mean  less  money  by  one-half,  but 
simply  security  for  sufficient  money  of  the  best 
sort  and  of  both  kinds. 

181.  THE  WORLD'S  MONEY  SUPPLY  TO-DAY. 

France  had  in  1896  $850,000,000  of  gold,  and  $487,- 
900,000  of  silver,  of  which  $430,000,000  was  full 
legal  tender.  The  United  States  had  $600, 100,000  of 
gold,  and  $487,900,000  of  silver,  of  which  $430,000,- 
ooo  was  full  legal  tender.  Germany  had  $625,000,000 
of  gold,  and  $215,000,000  of  silver,  of  which  $105,- 
000,000  was  full  legal  tender.  Great  Britain  had 
$580,000,000  of  gold,  and  $115,000,000  of  limited 
tender  silver.  These  four  leading  nations,  with 
$2,655,100,000  of  gold,  had  also  more  than  a  thou- 
sand millions  of  full  legal  tender  silver  ($1,074,800,- 
ooo),  and  $358,700,000  of  limited  tender  silver, 
making  $1,433,500,000  of  silver  money;  and  their 
supply  of  money  amounted  to  $4,088,600,000.  The 
pretence,  therefore,  that  the  money  supply  of  the 
world  had  been  cut  down  one-half,  and  silver  thrown 
out  altogether,  through  a  trick  of  the  London  hold- 
ers of  American  bonds,  to  make  gold  dear,  and 
silver,  labor,  and  property  generally  cheap,  had 
nothing  behind  it  except  either  scandalous  igno- 
rance or  shameless  mendacity. 


2OO 

The  entire  money  of  the  thirty-two  countries 
which  made  the  world  of-commerce  and  civilization 
in  1896,  footed  up,  gold  $4,068,800,000,  and  silver 
$4,070,500,000,  of  which  $3,440,700,000  was  full  legal 
tender.  This  showed  silver  a  full  half  of  the  money 
of  the  world.  And  to  this  amount  of  gold  and  sil- 
ver must  be  added  of  paper  money  $2,436,500,000. 
The  $10,575,800,000  of  the  total  money  of  the 
world  could  as  little  be  manipulated  by  London 
bondholders  as  the  water  or  the  weather  of  the 
Atlantic  could  be  controlled  by  an  English  weather 
bureau. 

182.   IGNORANT  IDEA  THAT   GOLD   IS    DOING  DOUBLE 

WORK. 

An  argument  entirely  without  reason,  other  than 
imaginary  and  fictitious,  and  wholly  false  as  to  its 
assumption  or  assertion  of  essential  facts,  is  that 
of  double  work  given  to  gold  to  do  when  it  alone 
is  made  the  standard,  and  the  inability  of  gold  to 
do  this  double  work.  It  is  said  that  by  the  course 
of  things  since  1873  gold  has  had  this  double  work 
put  upon  it,  and  that  gold  cannot  do  double  work 
in  that  way,  that  in  fact  the  supply  of  gold  is  not 
great  enough.* 


*The  average  annual  production  of  both  gold  and  silver  during 
the  years  1801-1810  was  $48,982,900;  and  that  of  the   years  1831- 
1840  was  only  $38,271,000.     Contrast  with  this  the  world's  output 
of  gold  alone  during  the  years  1890-1894: 
1890 $118,849,000 

1891  130,650,000 

1892  146,297,000 

1893 157,228,000 

1894    181,510,100 


201 
183.    GOLD   DID   DOUBLE   WORK  BEFORE    1873. 

It  would  be  difficult  to  make  a  more  ignorant  or 
more  untrue  statement.  The  silver  dollar  of  our 
fathers  had  been  put  out  of  use  as  early  as  1834, 
and  in  1873  gold  was  doing  the  whole  work  of 
money,  and  had  been  doing  it  for  forty  years.  If 
a  debt  was  paid  at  so  many  dollars  "in  silver,"  it 
was  actually  paid  in  gold  by  counting  102  or  105 
dollars  in  gold  equal  to  100  dollars  "in  silver." 
''In  silver"  only  meant  dollars  of  the  value  of  the 
standard  silver  dollar,  which  was  from  102  to  103^ 
cents  of  gold  value.  The  reason  for  the  absence 
from  the  channels  of  money  of  the  silver  dollars,, 
leaving  all  the  work  of  money  to  be  done  by  gold, 
was  the  simple  fact  that  each  silver  dollar  had  con- 
tained two  or  three  cents  worth  over  a  dollar  (gold 
value)  of  silver,  and  it  paid  the  money-mongers  ta 
get  all  of  them  in  exchange  for  gold  and  sell  them 
as  silver,  leaving  gold  to  do  the  whole  work  of 
money.  It  is  a  very  ignorant  assertion,  therefore, 
to  make,  that  by  a  change  in  1873  gold  was  made 
to  do  double  work.  It  was  already  doing  and  had 
long  done  the  whole  work  of  money. 

184.   SILVER   HAS   HELPED   SINCE    1873. 

As  to  the  course  of  things  since  1873,  while  gold 
has  remained  the  standard,  it  has  nothing  like  done 
the  whole  work  of  money,  but  has  had  immense 
help  from  silver.  Under  the  Allison  act,  passed 
Feb.  28,  1878,  as  an  amendment  to  the  Bland  bill 
for  free  coinage  of  silver  at  16  to  i,  there  were 
coined  of  silver  dollars  no  less  than  $378,166,793. 
And  under  the  Sherman  act  of  July  14,  1890,  silver 


202 

-was  further  called  into  service  to  the  extent  of 
$192,000,000,  making  $570,166,793  in  silver  helping 
gold  to  do  the  work  of  money. 

185.    SILVER   HELP   HAS   MADE   MATTERS   WORSE. 

But  the  help  which  silver  has  given  has  been  so 
badly  mismanaged  as  to  make  it  worse  than  none, 
and  the  help  which  silverism  proposes  would  drive 
gold  out  of  the  business  and  leave  silver  to  try  to 
•do  alone  what  it  cannot  so  much  as  begin  to  do 
unless  gold  takes  the  main  burden.  Gold  is  at  the 
least  sixteen  times  as  strong  as  silver;  it  is  in 
actual  fact  thirty  times  as  strong  as  silver;  the 
strength  being  in  paying  and  purchasing  power 
based  on  intrinsic  value.  Silver  can  help  from 
one-thirtieth  to  one-sixteenth,  according  to  its 
intrinsic  value ;  and  by  gross  mismanagement  the 
immense  mass  of  silver  put  at  work  by  the  acts  of 
1878  and  of  1890  named  above,  has  been  rated  as 
16  to  i,  that  is  16  silver  equal  to  i  gold,  when  in 
fact  it  takes  over  30  silver  to  equal  i  gold,  and  over 
fourteen-thirtieths  of  every  silver  dollar  is  not  real 
strength  but  is  fiat  strength,  which  is  in  fact  gold 
strength,  because  the  fiat  makes  the  sham,  cut- 
value,  47-cent  dollar*  indirectly  payable  in  gold. 
Gold,  that  is,  is  actually  doing  fourteen-thirtieths 
of  the  work  which  silver  pretends  to  do. 

1 86.    CRIMINAL  CONSPIRACY  AGAINST   GOLD. 

The  gold  might  well  enough  do  all  the  work  of 
American  money,  if  we  honestly  and  squarely 
promised  to  let  it,  and  made  reasonable  provision 

*It  was  a  53-cent  dollar  in  1896. 


203 

to  keep  our  promise ;  but  all  the  talk,  and  the  des- 
perate insane  purpose  of  silverism  is,  to  not  let  it, 
and  not  only  to  not  let  it  hold  the  53-cent  cut-value 
dollar  up  to  100  cents,  or  "as  good  as  gold,"  but  to 
take  gold  out  from  under  all  the  roo-cent  dollars, 
and  let  them  come  down  to  53  cents.  The  favorite 
way  of  arguing  this  desperate  destruction  of  value 
and  dishonor  to  our  credit  is  that  of  calling  the 
present  dollar  a  2oo-cent  coin,  but  this  means  cut- 
value  cents,  worth  in  paying  and  purchasing  power 
only  half  what  cents  are  now  worth  by  the  gold 
.standard. 

187.   SILVER   SALE    OF   GOLD. 

A  change  to  the  double  standard,  under  which 
16  silver  should  count  as  equal  to  i  gold,  would 
invite  the  money-mongers  to  take  away  all  our  gold 
at  a  profit  to  themselves  of  53  cents  for  every  dollar 
in  gold  taken  away  upon  payment  of  a  4/-cent  dol- 
lar. Even  if  the  profit  to  the  money-mongers  were 
less ;  even  if  it  were  but  a  fraction,  and  a  very  small 
fraction,  of  the  not  only  possible  but  manifestly 
probable  profit,  they  would  all  the  same  take  all 
the  gold,  no  matter  how  fast  we  coined  it  nor  how 
much  there  might  be  of  it,  and  silver  would  be  left 
alone  to  do  all  the  work  of  money. 

To  properly  estimate  silver  we  ought  to  say, 
instead  of  16  to  i  or  30  to  i,  one-sixteenth  of  one  or 
one-thirtieth  of  one.  The  actual  strength  of  silver 
is  below  one-thirtieth.  Calling  it  one-sixteenth 
will  not  make  it  so.  But  whether  one-thirtieth  or 
one-sixteenth  the  strength  of  gold,  silverism  pro- 
poses to  put  the  whole  work  of  money  upon  it, 


204 


reckless  to  insanity  and  to  crime  of  the  breakdown 
which  must  result.  The  mere  possibility  of  such 
madness  in  1896  could  not  but  shake  our  prosperity 
and  stay  our  progress  as  a  great  nation. 


CHAPTER  XVI. 

" INTERNATIONAL    BIMETALLISM." 

1 88.  DR.  F.  A.  WALKER'S  LAST  BOOK. 

Dr.  F.  A.  Walker,  president  of  the  Institute  of 
Technology  in  Boston,  and  an  economic  writer  of 
distinction,  had  in  1896  very  recently  stated  in  a  new 
book  the  case  against  the  gold  standard  as  this 
seems  to  those  who  desire  to  have  a  union  of  the 
nations  of  commerce  and  civilization  in  support  of 
double  standard  bimetallism. 

Dr.  Walker  told  us  in  this  new  book  *  that  he 
began  to  write  on  money  for  the  newspapers  as 
early  as  1858;  that  his  published  works  on  the  sub- 
ject began  with  the  issue  of  his  large  treatise  f  in 
1878;  that  the  Lowell  Institute  lectures  delivered 
by  him  in  1879  were  brought  out  in  book  form 
under  the  title  "Money,  Trade  and  Industry;"  that  he 
did  not  know  that  he  had  had  occasion  to  change 
a  single  one  of  the  opinions  expressed  in  these 
volumes ;  and  that  to  him  the  subject  of  money  had 
always  seemed  a  perfectly  simple  one  if  prejudice 
and  passion  are  not  allowed  to  obscure  it. 


*"  International  Bimetallism" 
f  "Money." 


205 

With  reference  to  the  issue  in  the  United  States 
raised  by  the  proposal  of  free  coinage,  Dr.  Walker 
said: 

"Though  a  bimetallist,  of  the  international  type, 
to  the  very  center  of  my  being,  I  have  ever  con- 
sidered the  efforts  made  by  this  country,  for  itself 
alone,  to  rehabilitate  silver,  as  prejudicial  equally 
to  our  own  national  interests  and  to  the  cause  of 
true  international  bimetallism.  In  my  'Money, 
Trade  and  Industry,'  published  after  my  return  from 
the  Paris  Conference,  1878,  I  made  use  of  the  fol- 
lowing language :  '  For  us  to  throw  ourselves  alone 
into  the  breach,  simply  because  we  think  silver 
ought  not  to  have  been  demonetized,  and  ought 
now  to  be  restored,  would  be  a  piece  of  Quixotism 
unworthy  the  sound  practical  sense  of  our  people. 
The  remedy  of  the  wrong  must  be  sought  in  the 
concerted  action  of  the  civilized  States,  under  an 
increasing  conviction  of  the  impolicy  of  basing  the 
world's  trade  on  a  single  money  metal.  The 
demonetization  of  silver  was  a  work  of  ill  advice. 
Let  its  restoration  be  a  work  of  good  advice.  The 
subject  is  not  likely  to  lose  its  hold  on  the  public 
attention  so  long  as  gold  continues  to  rise  in  value. 
Let  us  await  the  time  to  act  with  effect;  and  not 
forfeit  our  present  remarkable  success  and  imperil 
resumption  by  measures  which  can  do  no  lasting 
good  to  the  cause  of  silver  and  may  do  much  harm 
to  ourselves. ' 

189.    GOLD  VALUE  WRONGLY  VIEWED. 

It  is  anything  but  encouraging  to  find  Dr.  Walker 
confidently  assuming  as  beyond  question  that  "gold 


2O6 

continues  to  rise."  In  every  way  in  which  the 
question  can  be  considered,  gold  is  found  to  have 
gone  down  in  absolute  value  with  the  steady  large 
increase  of  the  supply.  Tested  by  the  wages  of 
labor,  by  the  rate  of  interest  at  which  its  use  can 
be  had,  and  by  the  presumptions  of  the  law  of 
supply,  gold  must  be  assumed  to  be  at  a  lower 
absolute  value  than  it  was  twenty,  thirty,  forty,  or 
fifty  years  ago. 

If  silver  and  common  commodities  are  in  this 
view  found  to  have  fallen  excessively  it  is  wholly 
in  consequence  of  causes  of  decline  in  no  way 
affected  by  the  value  of  gold.  The  movement  of 
values,  in  gold,  silver,  and  common  commodities, 
is  one  movement  due  to  one  operation  of  causes, 
which  is  the  same  for  gold  as  for  silver,  and  on 
which  use  or  disuse  as  money  has  hardly  any  influ- 
ence. The  fatal  defect  of  Dr.  Walker's  study  of 
money  is  his  failure  to  make  it  a  study  of  values 
which  remain  practically  the  same  whether  the 
money  mark  is  or  is  not  put  on,  and  which  the  put- 
ting on  of  that  mark  cannot  really  and  permanently 
alter. 

190.    RADICALLY   WRONG   IDEA   OF   MONEY. 

In  his  reading  of  the  story  of  money  Dr.  Walker 
thinks  that  "utterly  false  views  regarding  the 
nature  and  office  of  money"  controlled  nations  to 
whom  the  struggle  for  possession  of  the  precious 
metals  meant  a  grasping  after  real  values.  They 
did  not  know  that  "money"  is  "merely  the  tool 
and  agency  of  commerce. "  The  nations,  however, 
were  right.  Gold  and  silver  mean  real  values. 


20/ 

The  mark  "money,"  which  is  put  on  to  secure  and 
promote  use  of  these  values  in  commerce,  is  noth- 
ing but  a  mark. 

Dr.  Walker's  misapprehension  obliges  him  to 
maintain  that  the  vast  accumulations  of  Russia, 
France,  and  Germany,  in  gold,  do  not  testify  to  the 
estimate  universally  made  of  gold  as  the  surest  and 
safest  money,  but  are  the  result  of  bad  finance 
throwing  "money"  out  of  use.  At  least,  he  main- 
tains this  in  the  text  (p.  268),  but  he  admits  in  SL 
note  the  contrary  view,  and  his  note  might  have 
added,  by  way  of  further  contradiction  of  his  own 
determined  wrong  vew,  that  vast  reserves  of  gold 
values  sustain  credit  to  an  amount  worth  far  more 
than  the  interest  on  the  gold. 

191.   ABSURD   NOTION     OF    CURRENCY   CONTRACTION. 

Dr.  Walker  argues  that ' '  especially  low  rates  of 
interest  and  low  prices  of  merchandise"  are  the  re- 
sult of  currency-contraction  due  to  not  having  sil- 
ver a  standard  as  well  as  gold.  Hundreds  of  mil- 
lions waiting  to  be  loaned,  or  to  serve  as  the  basis 
of  thousands  of  millions  of  credit,  he  calls  currency- 
contraction,  and  low  interest  and  low  prices  he 
ascribes  to,  not  the  abundant  supply  of  gold  to  loan 
and  of  merchandise  to  sell,  but  to  the  sick  and 
dying  condition  of  silver  in  a  world  which  has 
$4,070,500,000  of  silver  money  to  $4,068,800,000  of 
gold  money.  Dr.  Walker  is  very  particular  about 
his  notions  for  an  economist  who  is  so  little  par- 
ticular about  his  facts. 


208 

192.   POSSIBLE   REGULATION   OF   GOLD    AND   SILVER 
VALUES. 

The  idea  most  confidently  insisted  upon  by  Dr. 
Walker,  as  "a  principle  absolutely  incontroverti- 
ble," appears  from  the  following  statement: 

"The  notion  that  law  cannot  influence  value  is 
not  unnaturally  derived  from  certain  conspicuous 
instances  where  laws  have  attempted  squarely  to 
cross  the  economic  impulses  of  mankind  and  to 
thwart  the  instinct  of  self-interest  at  its  maximum 
of  activity  and  of  intensity,  and  have  failed.  *  *  * 
Yet  there  are  numberless  instances  where  laws 
have  affected  values ;  and"  there  is  not  a  civilized 
country  in  the  world  at  present  where  law  is  not 
profoundly  affecting,  if  not  controlling,  the  value 
of  some  commodity.  Laws  often  affect  values  when 
they  were  not  intended  to  do  so.  Indeed,  it  is 
-often  difficult  to  prevent  laws  from  affecting  val- 
ues, when  they  are  passed  for  a  very  different  pur- 
pose, even  when  the  result  of  affecting  values  has 
been  carefully  sought  to  be  avoided.  The  truth  of 
the  matter  is,  law  cannot  affect  values,  much  less 
control  them,  except  as  it  sets  some  economic  force  in 
motion.  Whenever  law  sets  an  economic  force  in 
motion,  it  can  and  will  and  must  affect  values.  The 
degree  in  which  values  shall  be  affected  will  depend 
upon  the  extent  of  the  economic  forces  thus  put 
into  operation." 

193.   ALLEGED   ECONOMIC   FORCE    SET   IN   MOTION   BY 
MONEY    LAW. 

"As  regards  bimetallism,  then,"  Dr.  Walker 
continues,  "the  question  simply  is,  Can  govern- 


209 

rnent  set  in  motion  any  economic  force  which  will 
affect  the  relative  values  of  gold  and  silver?  I 
answer  yes,  incontestably ;  and  that  force  is  one  of 
enormous  scope  and  reach.  By  declaring  the  two 
metals  indifferently  legal  tender  in  the  payment  of 
debts,  at  a  certain  ratio,  it  at  once  and  powerfully 
influences  the  demand  for  one  and  the  other  of  the 
two  metals.  This  was  what  France  did  by  the  law 
of  1803.  That  law  gave  an  ounce  of  gold,  in  coined 
money,  precisely  the  same  power  to  pay  debts  as 
that  possessed  by  15  1-2  ounces  of  silver,  in  coined 
money.  The  operation  of  this  principle  was  sim- 
ple, instantaneous,  automatic.  If,  at  any  time, 
either  of  the  two  metals  became  less  valuable  than 
by  the  legal  ratio,  every  debtor  instinctively  sought 
coin  of  that  metal,  with  which  to  meet  his  obliga- 
tions, in  preference  to  coin  of  the  other  metal.  This 
increased  the  demand  for  the  cheaper  metal ;  and, 
by  that  very  act,  decreased  the  demand  for  the 
metal  which  was  becoming  dearer  in  the  market. 
Now,  to  increase  demand  is,  other  things  equal,  to 
lower  price.  Thus,  through  its  power  to  regulate 
the  payment  of  indebtedness,  the. government  prac- 
tically threw  its  weight  upon  that  one  of  the  two 
metals  which  tended  to  rise,  and  kept  it  down.  No 
one  wanted  the  dearer  metal  to  pay  debts  with ; 
every  one  wanted  the  cheaper  metal  for  that  pur- 
pose ;  and,  since  the  volume  of  indebtedness  com- 
ing due  every  day  in  any  commercial  country  is 
very  large,  the  force  thus  invoked  was  sufficient  to 
produce  an  enormous  economic  effect."  * 

* '"International  Bimetallism ,"  pp.  93-95. 
14 


2IO 

194-  DR-  WALKER'S  FUNDAMENTAL  ERROR. 

This  appeal  to  "force  of  enormous  scope  and 
reach,"  "sufficient  to  produce  an  enormous  effect/' 
sounds  plausible.  Dr.  Walker  declares  that  "one 
has  to  go  as  far  away  from  the  centers  of  educated 
financial  opinion,  as  Boston,  New  York,  and  Chi- 
cago, to  find  men  of  position  who  are  capable  of 
denying  it."  He  avers  that  "the  concurrence  of 
general  opinion  on  the  subject  is  overwhelming;  " 
that  "not  a  person  worth  quoting  can  be  cited  to 
the  contrary  effect ; ' '  and  that ' '  the  only  question 
that  can  possibly  arise  is  as  to  the  degree  of  the 
effect  produced." 

But  this  question  would  not  be  even  asked  if  the 
conditions  of  the  problem  were  understood.  The 
"degree  of  the  effect  produced"  is  apparent  only, 
and  not  real.  It  is  wholly  imaginary.  There  is 
absolutely  no  force  where  Dr.  Walker  assumes 
"one  of  enormous  scope  and  reach."  There  is 
nothing  whatever  in  use  as  money,  or  disuse  as 
money,  to  raise  or  to  lower  the  price  of  the  metal 
of  which  the  money  is  made.  If  gold  is  becoming 
dearer  in  the  market,  it  is  because  of  other  demand 
than  use  as  money  produced  by  its  having  been 
cheaper.  If  it  is  becoming  cheaper  in  the  market, 
it  is  for  other  reasons  than  disuse  as  money  pro- 
duced by  its  having  been  dearer.  The  fact  that 
debtors  seek  coin  of  the  cheaper  metal  with  which 
to  pay  their  debts  has  no  such  effect  on  the  market 
demand  for  that  metal  as  to  affect  its  price. 

The  only  demand  of  a  monetary  character  which 
could  at  all  affect  the  market  price  of  the  metal 
would  be  demand  for  more  of  the  metal  to  be 


211 

coined ;  and  the  demand  would  have  to  be,  or  to 
promise  to  be,  considerable,  in  order  to  have  even 
a  tendency  to  raise  the  price  of  the  metal.  Coinage 
in  no  way  uses  up  the  metal ;  does  not  deplete  the 
existing  stock  of  the  metal ;  and  the  mere  putting 
of  a  stamp  on  pieces  of  it  does  not  in  the  least  alter 
its  relation  to  the  market.  If  arrangements  for 
large  additions  to  the  existing  coinage  of  a  metal 
have  the  effect  of  carrying  up  its  price,  this  effect 
is  due,  chiefly  or  wholly,  to  a  misapprehension,  and 
as  soon  as  the  market  has  time  to  act  it  will  almost 
wholly,  if  not  wholly  cease.  Not  only  so,  but  if 
this  arrangement  for  coinage  of,  we  will  say,  a 
very  large  amount  monthly  of  the  metal,  is  made 
with  a  view  to  arresting  the  decline  in  price  of  the 
metal  caused  by  large  increase  of  supply,  it  will 
have  only  a  limited  transient  effect.  Coinage  can- 
not affect  the  market,  simply  because  it  does  not 
take  the  metal  off  the  market,  does  not  use  it  up 
and  make  way  for  more. 

Still  less  can  use  as  money  have  any  effect  on  the 
market  price  of  the  metal.  With  a  supply  of  coined 
metal  in  circulation,  nothing  whatever  in  the  circu- 
lation can  in  the  least  affect  the  price  of  the  metal. 
Dr.  Walker  is  especially  the  victim  of  his  own 
phrases  when  he  tells  us  how  decreasing  the  demand 
for  the  metal  which  is  becoming  dearer  lowers  its 
price,  through  the  government  throwing  its  whole 
weight  upon  that  one  of  the  two  metals  which  tends 
to  rise  and  thereby  keeping  it  down.  Demand  for 
the  metal  is  not  in  the  least  altered,  up  or  down, 
whether  the  money  made  of  that  metal  is  in  use  or 
is  lying  idle.  The  metal  is  in  use  in  idle  money 


212 

quite  as  really  and  quite  as  effectively  as  in  money 
that  is  not  idle.  The  whole  weight  of  the  govern- 
ment is  not  thrown,  not  an  ounce  of  it,  by  contriv- 
ing that  debtors  shall  leave  the  dearer  money  lying 
idle.  If  the  sole  use  of  nutmegs  and  of  cloves  was 
that  of  smelling  of  them,  and  a  supply  of  both 
were  in  the  hands  of  the  public,  the  mere  fact  that 
with  hot  spells  the  smelling  was  confined  to  nut- 
megs, and  with  cool  spells  was  confined  to  cloves, 
would  not  carry  up  the  price  of  the  one  or  the 
other  according  as  the  one  or  the  other  were  in  use, 
without  being  appreciably  used  up.  Demand  for 
the  use  of  money  is  not  demand  for  more  of  the 
metal  of  which  that  money  is  made. 

195.   A   WHOLLY   BASELESS   THEORY. 

What  Dr.  Walker  calls  "the  force  exerted  by  the 
bimetallic  system  in  restraining  tendencies  to 
divergence,  from  natural  and  commercial  causes, 
between  the  two  metals,"  is  a  purely  imaginary 
force.  And  the  proof  which  he  relies  upon  for 
substantiating  the  existence  and  action  of  this 
force,  that  of  "the  working  of  the  French  system, 
under  the  great  storm  which  followed  the  gold 
discoveries  of  California  and  Australia,"  is  of  no 
validity  whatever.  The  "storm,"  as  to  anything 
more  than  false  notions  and  fears,  had  no  exist- 
ence. Dr.  Walker  himself  says  that ' '  the  maximum 
momentary  effect  of  more  than  doubling  the  world's 
stock  of  gold  was  "  only  enough  "to  pull  the  metals 
apart  by  4  3-4  per  cent. ;  while  the  permanent 
effect  upon  the  ratio  was  only  i  1-2  in  100." 

The  scare  was  no  doubt  severe,  but  it  was  a  scare 


213 

pure  and  simple,  and  yet  Dr.  Walker  assumes  that 
nothing  prevented  senseless  panic  fear  that  gold 
would  drop  one-half  from  coming  true  except  the 
bimetallism  of  France.  ' '  The  astonishing  spectacle 
is  exhibited,"  Dr.  Walker  exclaims,  "of  one  nation, 
alone,  unaided,  not  only  maintaining  that  monetary 
system  unshattered  and  almost  unshaken,  through 
the  greatest  storm  of  centuries,  but  even  preserv- 
ing the  monetary  peace  of  the  world  and  carrying 
Europe  through  what  threatened  to  be  a  complete 
wreck  of  industry  and  finance." 

If  the  state  of  things  was  hardly  shaken,  and 
monetary  peace  was  almost  undisturbed,  it  is  mere 
hysterical  exaggeration  to  pretend  that  there  was  a 
storm  which  might  have  produced  universal  wreck. 

196.  FALSE  IDEA  OF  EFFECT  OF  NEW  SUPPLY  OF 
GOLD. 

The  use  which  Dr.  Walker  incessantly  makes  of 
delusive  figures  of  speech  disqualifies  him  for  serv- 
ing as  a  competent  scholar  and  teacher.  The  new 
supply  of  gold  of  1850-60  his  story  makes  to  have 
suggested  a  tumble  of  gold  value  of  fully  one-half ; 
it  looked,  he  says,  as  if  "gold  might  fall,  in  a  suc- 
cession of  plunges,  from  crag  to  crag,  down  to  a 
level  which  would  mean  nothing  less  than  universal 
bankruptcy."  Chevalier,  he  says,  wrote  a  book  on 
the  "Probable  Fall  in  the  Value  of  Gold  "  in  which 
he  more  than  once  "used  the  illustration  of  a  fall 
to  one-half  its  former  value,"  —  his  object  being 
"to  show  briefly  and  strikingly  what  might  come 
from  the  bursting  of  the  great  reservoir  and  the 
of  trade  and  the  seats  of  industry."  It  was  a 


214 

rushing  of  its  mighty  waters  down  upon  the  marts 
"menace  to  industry,  finance,  and  even  the  social 
structure."  It  was  "the  greatest  financial  storm 
of  two  centuries.  By  the  end  of  1860  the  gale  had 
well-nigh  blown  itself  out,  though  the  waves  were 
still  running  high." 

By  this  language  Dr.  Walker  refers,  not  to  igno- 
rant and  baseless  fears  of  what  might  happen,  but 
to  the  natural  result  in  the  world  of  finance  of  the 
new  supply  of  gold.  But  there  was  in  fact  no  such 
sudden  and  overwhelming  increase  of  the  world's 
production  of  gold,  in  1850-60,  as  Dr.  Walker  im- 
plies. The  annual  average  of  1831-40  was  $13,- 
484,000.  This  had  risen  for  1841-50  to  $36,393,000, 
or  nearly  three-fold.  For  1851-55  it  reached  $132,- 
513,000;  and  for  1856-60,  $134,083,000;  a  consider- 
ably less  than  four-fold  rate  of  advance,  for  which 
the  nearly  three-fold  of  the  earlier  decade  had  been 
no  inconsiderable  preparation. 

And  vast  as  the  aggregate  of  gold  added  to  the 
world's  stock  was,  $1.332,981,000  for  the  decade 
1851-60,  it  was  not  more  than  the  world  could  take. 
In  fact  the  world  took  in  the  next  twenty-five  years, 
1861-85,  $2,909,411,000,  and  has  taken  in  the  decade 
1886-95,  $1,382, 824,000  more.  The  gold  of  the  world 
produced  since  1850*  aggregates  $5, 62 5, 2 16,000,  with- 
out any  suggestion  of  a  sea  lashed  into  waves  moun- 
tain high  and  portending  universal  destruction. 
Looking  back  over  this  addition  since  1850,  of  more 
than  five  and  a  half  billions  of  gold  to  the  world's 
supply,  actual  facts  show  the  absurdity  of  claiming 


*  To  1896. 


215 

to-day  that  the  first  stage  of  this  inflow  of  gold 
would  have  brought  "a  catastrophe  the  destructive 
effects  of  which  can  hardly  be  conceived,"  had  not 
France  at  the  moment  had  free  coinage  of  both 
silver  and  gold  at  the  15  1-2  ratio.  The  event 
proved  that  there  was  no  capital  peril  in  any  pos- 
sible coming  of  gold.  If  there  had  been  any,  noth- 
ing whatever  could  have  stayed  the  effect  of  gold 
continuing  to  come  until  5,625  millions  of  dollars 
had  arrived. 

France  took  gold  in  the  eight  years,  1853-60,  to 
the  amount  of  3,082  million  francs  simply  because 
it  was  worth  taking.  It  sold  silver  to  the  amount 
of  1,465  million  francs,  the  money  market  elsewhere 
rating  it  worth  more  than  the  French  coin  rate. 
This  left  France  with  no  more  than  about  325  mil- 
lion dollars  (1,617  million  francs)  added  to  her  stock 
of  money,  about  41  million  dollars  a  year.  It  was 
anything  but  a  sea  with  waves  running  mountain 
high.  There  was  no  reason  whatever  for  alarm 
lest  gold  should  fall  one-half,  and  there  is  no  reason 
now  for  pretending  that  disaster  would  have 
involved  everything  in  universal  wreck  had  not 
France  taken  all  this  gold  as  she  did,  under  the  151-2 
ratio.  Her  taking  it  had  no  effect  on  the  market 
price,  beyond  that  of  momentary  check  upon  sense- 
less panic  fear,  and  even  if  this  fear  had  prevailed, 
we  have  no  reason  to  doubt  that  the  senselessness 
of  it  would  have  appeared  soon  enough  to  control 
the  permanent  course  of  events.  At  any  rate,  what 
the  event  proved  was,  not  that  free  coinage  could 
hold  up  the  price  of  gold,  but  that  the  price  of  gold 
did  not  need  holding  up. 


216 

An  exact  historical  statement,  made  by  Mr, 
Horace  White,  of  what  took  place  in  France  from 
1850  to  1860,  in  consequence  of  "an  enormous 
increase  in  the  production  of  gold  in  Russia,  Cali- 
fornia, and  Australia,  and  scarcely  any  increase  in 
that  of  silver,"  is  as  follows: 

"The  market  ratio  declined  to  15.46  in  the  year 
1851;  so,  of  course,  gold  could  again  circulate  in 
France.  The  ratio  continued  to  decline  till  1859, 
when  it  reached  its  lowest  point,  viz.,  15.19.  It 
remained  below  151-2  till  1867.  During  this  inter- 
val of  sixteen  years  France  imported  $600,000,000 
of  gold  and  exported  about  half  that  amount  of 
silver.  Her  circulation  became  saturated  with  the 
yellow  metal,  to  the  great  delight  of  her  people, 
who  had  become  tired  of  carrying  sacks  of  five-franc 
pieces  to  and  fro  in  cabs  and  handcarts. ' '  * 

197.    POSSIBLE   PERIL   IN   SILVER. 

Dr.  Walker  could  not  more  certainly  certify  his 
own  incompetence  as  a  bimetallist  than  by  assum- 
ing that  any  showing  of  what  the  system  would 
stand  under  a  flood  of  gold  could  serve  as  proof  of 
what  the  system  would  stand  under  a  flood  of  sil- 
ver. A  competent  instinct  in  finance,  to  say  noth- 
ing of  knowledge  and  judgment,  would  warn  the 
bimetallist  to  suspect  at  least  sixteen  to  one  of 
peril  in  the  silver  end  of  his  system. 

A  glance  at  a  table  of  production  of  gold  and  sil- 
ver in  the  world  since  the  discovery  of  America 
would  bring  to  view  the  fact  that  only  five  per 

*  ''"Money  and  Banking ,"  p.  64. 


cent,  of  it  by  weight  has  been  gold,  ninety-five  per 
cent,  by  weight  having  been  silver.  Here  surely 
the  suggestion  is,  perhaps  not,  to  instructed  imagi- 
nation, of  seas  of  silver  with  waves  running  moun- 
tain high,  but  at  least  of  sacks  of  silver  requiring  a 
handcart  for  convenient  carriage  of  a  pocket-book. 
And  even  in  respect  of  value  the  gold  produced 
has  been  only  45.9  per  cent.,  $8,011,122,035,  the 
silver  having  been  54.1  percent.,  or  $10,357,814,100. 
Ten  and  a  third  billions  of  bulky,  heavy  silver  to 
barely  eight  billions  of  gold  might  well  seem  a 
dangerously  uncertain  end  of  a  double  system  even 
if  no  special  uncertainty  attaches  to  silver.  Silver 
has  more  than  kept  ahead  during  the  last  fifteen 
years,  1881-95.  The  silver  value  for  1881-85  was 
$594,773,000;  that  of  gold  $495,582,000.  For  each 
of  the  ten  1886-95  years  the  production  has  stood: 

SILVER.  GOLD. 

1886 $120,626,800  $106,163,900 

1887 124,281,000  105,774,900 

1888 140,706,400  110,196,900 

1839 155,427,700  123,489,200 

1890 163,032,000  118,848,700 

1891 I77>352,300  I30..650,000 

1892 198,014,400  146,815,100 

1893 214,745,300  157,287,600 

1894 216,892,200  180,626,100 

1895 226,000,000  203,OOO,OOO 

In  one  of  these  years  gold  fell  back ;  in  not  one 
did  silver,  not  even  with  the  terrible  damage  alleged 
to  have  resulted  from  "demonetization."  Is  this 
what  the  world  wants,  more  than  half  the  value 


218 

and  ninety-five  per  cent,  of  the  weight  of  its  money 
in  silver?  Would  the  silver  end  of  a  bimetallic 
system  be  safe,  if  cheap,  and  ever  cheaper  silver, 
were  to  come  in  overwhelming  amount? 

198.   FRANCE  FORCED   TO   DROP   SILVER. 

We  may  well  ask  how  France  came,  with  the  sil- 
ver standard  consecrated  by  custom  and  tradition, 
with  almost  all  her  economists  and  financiers  opin- 
ionated to  a  degree  in  its  favor,  with  the  gold  stand- 
ard the  one  which,  with  one  accord,  they  would 
gladly  have  removed  from  their  bimetallic  system, 
and  with  Belgium,  Italy,  Switzerland,  and  Greece 
unlisted  to  help  her  make  her  system  work  happily 
and  stand  securely,  —  how  came  she  to  let  the  sil- 
ver end  go,  and  trust  herself  to  the  gold  end  alone? 
The  commission  of  1857  was  "bent  upon  maintain- 
ing the  silver  standard,"  and  made  "senseless 
recommendations"  *  looking  to  legal  control  of  the 
market,  but  experiment  soon  proved  that  this  was 
of  no  avail.  Then  Chevalier,  whose  head  was  so 
rattled  at  the  sight  of  plenty  of  gold  that  he  thought 
the  yellow  metal  would  drop  one-half  in  price,  sug- 
gested a  coinage  baby- jumper  for  gold,  to  make  it 
follow  the  ups  and  downs  of  silver ;  while  Levas- 
seur,  whom  the  event  justified,  advised  accepting 
by  law  what  was  already  fixed  in  fact,  the  standard 
action  of  gold.  Nothing  was  done  until  1864,  and 
then  nothing  more  than  to  do  what  the  United  States 
liad  done  in  1853,  cause  small  coins  to  be  made  of 


*  See  Mr.  Horace  White's  Excellent  account,  " Money  and  Bank- 
ing" pp.  62-67. 


219 

a  value  distinctly  below  gold  value.  There  was 
but  slight  relief  in  this,  and  in  1865  another  larger 
move  was  made,  that  of  the  Latin  Union  scheme  of 
subsidiary  limited  tender  coinage  of  silver.  Resist- 
ance to  doing  anymore  lasted  until  1873,  when  the 
flooding  of  the  mint  with  silver,  more  than  thirty 
times  as  much  in  1873  as  in  1871-2,  and  more  than 
the  mint  could  coin  in  a  year  and  a  half  if  it  coined 
nothing  but  silver,  led  to  action  by  the  Latin  Union 
to  not  allow  the  flood  of  silver  to  exceed,  for  all 
the  four  countries,  a  coinage  of  120,000,000  francs  a 
year. 

The  situation  was  that  of  holding  up  the  price  of 
silver  by  taking  it  at  the  ratio  of  15  1-2  when  it 
really  required  15  3-4  ounces  to  equal  one  of  gold, 
and  the  certain  prospect  was  of  further  decline  of 
silver.  The  figures  may  be  most  clearly  followed 
if  we  reduce  the  ratio  to  quarters,  and  call  151-2 
.sixty-two  quarters.  The  mint  paid  62  for  gold 
while  the  market  paid  63.  By  1876,  while  the  mint 
still  rated  gold  as  worth  only  62,  the  market  was 
giving  68.  Anybody  who  chose  could  take  gold  at 
62  and  sell  it  at  68.  All  government  transactions 
counted  gold  at  62  while  the  market  counted  it  at 
68.  The  minister  of  finance,  M.  Leon  Say,  sought 
from  the  Legislature  leave  to  limit  or  suspend  the 
coinage  of  silver  at  discretion,  and  a  bill  passed 
August  5,  1876,  authorizing  this.  The  committee 
of  the  Senate  to  which  the  matter  was  referred 
reported  in  favor  of  absolute  prohibition  of  further 
coinage  of  full  legal  tender  silver.  Such  was  French 
distrust  of  the  silver  end  of  her  own  bimetallic 
.system. 


220 

199-   DOUBLE   STANDARD    DID    NOT   GIVE   FRANCE 
DOUBLE    MONEY. 

The  fundamental  question  in  regard  to  the  opera- 
tion of  the  double  standard  system  in  France  from 
1803  to  1873  is  not  that  of  the  ratio  but  that  of  the 
supply  of  money,  both  gold  and  silver.  Dr.  Walker 
says  of  the  period  1803-1850:  "Both  gold  and  sil- 
ver remained  money  in  France,  though  the  propor- 
tion of  the  latter  tended  continually  to  increase, 
and  the  proportion  of  the  former  to  decline. ' '  This 
is  perilously  near  to  falsification  of  facts  for  the 
benefit  of  a  theory.  Mr.  Horace  White  has  the 
facts  to  support  him  when  he  says  that  "abundant 
proofs  can  be  adduced  showing  that  bimetallism 
did  not  exist  in  practice  in  France  between  1820 
and  1847."  Gold  was  steadily  at  a  premium,  with 
the  effect  of  taking  it  out  of  the  circulation,  and 
leaving  silver  alone  as  the  currency. 

The  assertion  of  Dr.  Walker  that  "France  pre- 
served her  bimetallic  system  in  full  virtue  from 
1819  down  to  the  middle  of  the  century,"  is  dis- 
tinctly and  flagrantly  contrary  to  the  truth.  Mr. 
White  states  the  real  truth  when  he  says  that  "the 
contention  of  the  bimetallists  that  the  French  law 
of  1803  kept  the  ratio  steady  at  15  1-2  till  1873  is 
contradicted  by  facts."  Thus  Chevalier,  in  his 
"Probable  Fall  of  Gold  "  written  in  1859,  said: 

"A  change  of  i  1-2  per  cent,  in  favor  of  gold  had 
sufficed,  thirty  or  forty  years  ago,  to  cause  that 
metal  to  disappear  wholly  from  commercial  pay- 
ments." 

"Under  the  regime  of  the  law  of  1803,  gold  had 
ceased  to  figure  in  transactions  of  any  magnitude, 


221 

since  it  acquired  an  appreciable  premium.  People 
took  their  gold  to  the  money  changer,  in  order  to 
pocket  the  premium,  and  made  payments  exclu- 
sively in  silver,  as  everybody  knows." 

In  confirmation  of  these  statements,  Mr.  White 
quotes  the  following : 

"Before  1848  silver  was  the  usual  money;  daily 
payments  were  made  in  five-franc  pieces.  Gold, 
proportionally  rare,  had  at  this  epoch  almost  gone 
out  of  the  French  monetary  circulation,  in  which 
it  was  estimated  that  not  more  than  one  hundred 
million  francs  remained.  Block's  "Dictionnaire  de 
la  Politique"  vol.  II.,  p.  338. 

"In  France,  all  large  payments,  which,  as  is  well 
known,  were  formerly  made  in  sacks  of  five-franc 
pieces  (silver),  have  been  of  late  years  effected  in 
gold,  and  almost  all  the  old  five-franc  pieces  have 
been  successively  exported  or  melted  down. ' '  Re- 
port by  M.  Achille  Fould,  Minister  of  Finance  to 
Napoleon  III.,  on  the  monetary  treaty  of  1865. 

' '  In  those  times  when  one  was  paid  even  so  small 
a  sum  as  one  thousand  francs,  he  received  his  bulky 
and  heavy  money  in  a  canvas  bag  and  had  to  hire 
a  porter  or  a  cab  to  carry  it  home."  Prof.  Francis 
Bowen  in  Report  of  United  States  Monetary  Com- 
mission of  1876,  p.  146. 

Dr.  Walker  insists  that  there  was  no  such  absence 
of  gold  from  circulation,  and  no  such  compulsion 
to  accept  the  bulky  and  heavy  silver  money.  He 
does  this  in  disregard  of  the  facts,  and  with  rea- 
sonings which  are  based  solely  on  "the  very  center 
of  his  being,"  the  conviction  that  it  must  have 
been  so.  He  alleges  gold  coinage  to  the  extent  of 


222 

24,000,000  francs  a  year  as  proof  of  gold  circulation, 
when  nothing  has  been  more  common  than  coinage 
solely  for  the  benefit  of  export. 

2OO.  THEORY  OF  BIMETALLISM  BASED  ON  SUP- 
POSED FRENCH  EXPERIENCE. 

Dr.  Walker  expressly  acknowledges  that  his 
theory  of  double  bimetallism  came  out  of  the  ex- 
perience of  France.  France  undertook,  he  says, 
to  regulate  and  control  the  values  of  the  precious 
metals,  by  a  free  importation,  free  coinage,  and 
free  exportation  system,  in  which  the  ratio  between 
silver  and  gold  was  151-2  ounces  of  silver  equal  to 
i  ounce  of  gold.  In  Dr.  Walker's  view  the  result 
of  chief  significance  was  the  survival  of  this  system 
during  the  period  (1850-60)  of  an  immense  addition 
to  the  world's  stock  of  gold.  Drawing  upon  his 
imagination  for  the  story  of  double  standard  bimet- 
allism in  France,  Dr.  Walker  says:  "The  aston- 
ishing spectacle  is  exhibited  of  one  nation,  alone, 
unaided,  not  only  maintaining  that  monetary  sys- 
tem unshattered  and  almost  unshaken,  through  the 
greatest  storm  of  centuries,  but  even  preserving 
the  monetary  peace  of  the  world  and  carrying 
Europe  safe  through  what  threatened  to  be  a  com- 
plete wreck  of  industry  and  finance."  This,  says 
Dr.  Walker,  suggested  the  theory  that  "if  a  single 
people  could  exert  such  prodigious  power  in  influ- 
encing and  controlling  the  relations  of  the  two 
money  metals,  by  admitting  them  freely  to  coinage 
at  a  ratio  and  making  them  indifferently  legal  ten- 
der in  the  payment  of  debts,  the  co-operation  of  a 
group  of  commercial  states,  both  increasing  the 


223 

strength  of  the  bimetallic  system  on  the  one  hand, 
and  on  the  other  hand  diminishing  the  extent  and 
violence  of  the  hostile  forces  by  which  it  could  in 
any  event  be  assailed,  might  suffice  to  give  the 
woild  a  circulating  medium  which  should  be  essen- 
tially the  same  in  all  lands ;  whose  value  should  be 
more  stable,  through  long  terms  of  years,  than 
either  of  its  two  constituents  could  possibly  be,  — 
and  which  should  thus  be  'sound  money'  and  'hon- 
est money,'  in  a  much  higher  degree  than  mono- 
metallic money  could  be;  and  which,  by  creating 
a  normal  par  of  exchange  between  all  trading  com- 
munities, should  conduce  to  the  promotion  of  inter- 
national intercourse  and  to  the  peace  and  prosper- 
ity  of  mankind." 

201.    BIMETALLISM   A   RECENT   NOVELTY. 

Dr.  Walker  expressly  recognizes  that  this  theory 
was  a  middle-of-the-nineteenth  century  novelty. 
Thus  he  goes  on  from  the  above  statement  as 
follows : 

"No  wonder  such  a  theory  had  to  wait  until  well 
nigh  into  the  middle  of  the  nineteenth  century  that 
it  might  be  born.  It  was  only  when  the  humane 
sentiments  had  made  great  progress  in  removing 
the  prejudices  and  animosities  of  nations  and  races ; 
when  international  alliances,  leagues,  and  conven- 
tions had  made  familiar  the  idea  of  co-operation  for 
the  general  good ;  *  *  *  it  was  only  in  such  a 
time  that  a  theory  like  that  of  international  bimet- 
allism could  possibly  have  found  acceptance  on  the 
part  of  financiers,  statesmen,  and  men  of  business ; 
and  it  was  only  when  the  true  theory  of  the  gen- 


224 

eral  interest  of  mankind  in  respect  to  money  had 
been  developed  to  the  point  reached  at  about  the 
middle  of  our  own  century,  that  such  a  theory 
could  possibly  have  taken  definite  form. ' ' 

202.  ERRORS  OF  DR.  WALKER'S  ARGUMENT. 

(1)  These   contentions  are   vitiated    by    several 
errors  of  false  representation  of   facts  and   false 
conception  of  the  significance  of  facts.     In  the  first 
place  France  did  not  in  reality  regulate  and  control 
the  values  of  the  precious  metals.     The  entire  his- 
tory of  French  action  is  one  of  utter  failure  to  hold 
the  two  metals  near  enough  to  each  other  in  value 
to  secure  anything  like  the  concurrent  circulation 
of  both  as  money. 

(2)  France  went,  and  Europe  went,  safely  through 
the  great  gold  period  of  1850-65  because  there  was 
nothing  whatever  of  real  peril  in  the  new  supply 
of  gold.     When  Dr.  Walker,  in  view  of  the  experi- 
ence of  France,  speaks  of  "its  monetary  system 
exposed  to  terrific  trial  by  the  floods  of  new  gold," 
his  language  is   that   of   baseless   imagination   of 
what  might  have  been.     The  coming  of  so  much 
gold,  and  the  departure  of  about  half  the  amount 
of  silver,  was  an  unmixed  good,  when  properly 
understood. 

(3)  It  did,  indeed,  deal  silver  as  a  standard  a  fatal 
blow,  but  that  was  in  line  with  economic  progress, 
and  was  a  benefit,  and  only  a  benefit,  to  France  and 
to  Europe.     The  world  was  fast  coming  to  under- 
stand the  supreme  position  of  gold  as  a  high,  sure, 
steady  value,  and  the  natural  and  necessary  sub- 
sidiary position  of  silver,  extremely  important  as 


225 

secondary  money  and  utterly  uncertain  and  dan- 
gerous as  fundamental  and  primary  money. 

(4)  There  was  never  at  any  time  in  the  experi- 
ence of  France,  or  in  human  experience  anywhere, 
any  evidence  that  the  standard  was  better  for  try- 
ng  to  have  it  double,  and  never  was  France,  or  any 
other  nation,  able  to  have  double  money  as  the 
result  of  linking  silver  and  gold  by  a  legal  ratio 
which  hardly  ever  agreed  with    the  commercial. 
On   the  contrary,   facts  which  forced    themselves 
upon  recognition  everywhere  put  in  the  clearest 
light  the  superiority  of  the  single  gold  standard, 
and  made  manifest  to  all  sound  judgment  that  both 
gold  and  silver  serving  in  any  desired  amount  as 
money  together  could  only  be   under  the  single 
standard,  the  gold  standard  everywhere  chosen  by 
the  preferences  of  mankind. 

(5)  The  alleged  par  of  exchange  created  by  an 
abortive  effort  to  keep  silver  and  gold  together 
never  had  any  reality,  except  in  appearance,  and 
could  not  be  kept  even  apparently  effective  with 
any  extreme  decline  in  the  market  value  of  silver. 
The  nations  interested  in  an  immense  use  of  silver 
could  not  have  their  silver  necessities  adequately 
met  except  with  silver  made  subsidiary  to  gold,  and 
the  progress  of  these  nations  demanded,  quite  as 
really  as  progress  anywhere  else,  the  use  of  the 
gold  standard. 

(6)  The  progress  characteristic  of  the  middle  of 
the  nineteenth  century  all  looked  in  the  direction 
of  a  common  adoption  throughout  the  world  of  the 
gold  standard.     The  theory  for  which  Dr.  Walker 
contends  never  was  anything  but  an  eccentric  spec- 

15 


226 

illation,  opposing  itself  to  the  universal  trend  of 
progress,  and  holding  by  accidents  of  the  past  which 
had  no  significance  for  the  future.  It  was  when 
the  fog  had  not  yet  lifted,  when  a  false  theory  of 
money,  as  in  some  sense  the  creation  of  law,  apart 
from  real  values,  had  come  into  vogue,  and  before 
gold  in  all  its  functions  was  properly  understood, 
that  the  delusion  of  a  double  standard,  a  two-headed 
system,  asserted  itself. 

2O3.   MISTAKES   OF  ECONOMISTS   USED   IN   PROOF. 

Dr.  Walker  is  more  than  contented  with  the 
abundance  of  mistakes  of  reasoning  made  by  writ- 
ers of  repute  whom  he  calls  gold  monometallists, 
but  whose  position  was  really  that  of  having  yielded 
to  the  claims  of  gold  without  clearly  comprehend- 
ing the  exact  ground  of  those  claims.  Thus  Jevons, 
assuming,  quite  contrary  to  the  fact,  that  use  or 
disuse  as  money,  caused  the  metal  values  to  rise  or 
fall,  naturally  argued  that  the  play  of  the  two 
values  would  be  like  the  play  of  the  two  scales  of  a 
balance ;  or  like  the  action  of  the  surfaces  of  two 
reservoirs  connected  by  a  communicating  channel. 

The  mistake  of  the  whole  class  of  writers  to 
whom  Dr.  Walker  appeals  was  that  of  failing  to 
see  that  values,  in  gold  and  silver,  are  created, 
maintained,  modified,  held  steady  or  made  to  fluc- 
tuate, almost  or  quite  wholly  without  reference  to 
use  or  disuse  as  money ;  and  that  reasonings  which 
assume  that  values  of  the  metals  rise  and  fall  with 
use  and  disuse  as  money  are  as  baseless  as  they 
have  seemed  plausible. 

The  twelve  members  of  the  Herschell  committee. 


227 

of  1888,  six  of  whom  were  gold  monometallists, 
united  in  arguing  that  the  tumble  of  silver  away 
from  the  level  of  gold  after  1873  must  have  been 
the  result  of  the  suspension  in  that  year  of  the  full 
operation  of  the  French  or  Latin  Union  bimetallic 
system.  But  they  only  guessed  at  this,  without 
any  clear  light  on  the  conditions  of  the  problem. 
Economic  science  was  in  the  position  of  slowly 
coming  to  the  full  knowledge  of  the  gold  standard 
with  both  gold  and  silver  money,  and  not  a  few 
things  justly  thought  in  respect  to  double  money 
were  by  inadvertence  said  of  the  standard. 

204.  INADEQUATE  DEFENCE  OF  BIMETALLISM. 

The  general  defence  which  Dr.  Walker  makes 
on  behalf  of  double-headed  bimetallism  runs  as 
follows : 

"  The  bimetallists  of  to-day  stand  upon  the 
ancient  order.  Universal  monometallism  is  the 
new  and  untried  thing.  Bimetallism  is  the  old  and 
well-approved  monetary  system  of  mankind.  We 
know  what  bimetallism  is  and  what  it  will  do.  The 
method  of  its  operation,  the  nature  of  its  effects, 
are  well  known,  and  can  be  studied  historically  and 
statistically,  upon  a  wide  scale.  No  one  knows 
what  universal  monometallism  would  be,  or  what 
it  would  do.  Such  a  thing  never  existed.  During 
the  past  twenty  years  the  world  has  made  rapid 
progress  in  that  direction ;  but  the  end  is  still  far 
distant,  and  no  one  can  say  what  the  system  would 
be,  and  what  effects  it  would  produce.  Monomet- 
allism is  only  half  born.  The  twenty  three  years 
(1873-96)  during  which  it  has  been  trying  to  make 


228 

its  way  into  the  light  have  been  years  of  unparal- 
leled commercial  disaster  and  disturbance;  and  at 
the  end  of  that  painful  period,  leading  gold  mono- 
metallists,  like  Sir  Robert  Giffen,  declare  that  the 
system  cannot  possibly  be  extended  to  India  and 
the  further  East ;  or,  like  Goetbeer  and  Lexis,  of 
Germany,  declare  that  it  has  already  gone  too  far 
in  Europe  and  that  a  portion  of  the  ground  must 
be  retraced.  On  the  other  hand,  bimetallism  has 
a  long  record  of  beneficent  activity  in  promoting 
the  stability  and  regularity  of  trade  and  produc- 
tion.* 

Dr.  Walker  does  indeed  stand  upon  the  ancient, 
outworn,  discredited,  and  discarded  scheme  for 
having  both  silver  and  gold  as  money  by  making 
both  standard,  when  all  experience  shows  that  if 
both  are  standard  only  one  of  the  two  will  stay  in 
anything  like  adequate  circulation  as  money,  and 
that  such  bimetallism  of  the  standard  is  the  most 
unsatisfactory  monometallism  of  money. 

What  we  know  in  regard  to  Dr.  Walker's  double 
standard  bimetallism  is  that  it  is  not  bimetallism 
of  money  in  any  adequate  sense,  and  never  can  be, 
and  that  it  is  at  times  the  worst  possible  famine  of 
one  of  the  two  kinds  of  money.  Dr.  Walker's 
statements  turn  monetary  science  into  a  game  of 
blind  man's  buff,  to  the  scandal  of  all  honest  think- 
ing. No  fact  of  history  is  more  certain  than  the 
difficulty  of  having  double  money  under  a  double 
standard. 

Just  what  "monometallism"  means  in  the  above 


*  **  International  Bimetallism"  pp.  160,  161. 


229 

statements  by  Dr.  Walker  may  be  doubtful.  It 
should  refer  to  the  standard  only,  and  not  to  money. 
To  all  appearance  Dr.  Walker  conjures  up  an  ideal 
abomination  in  the  shape  of  gold  only  in  use  as 
money,  gold  excluding  silver  from  use.  The  ma- 
lignant dream  hypnotizes  him.  But  he  should 
know  better  than  to  suppose  any  such  monomet- 
allism of  money  possible.  Bimetallism  of  money 
is  the  express  aim  of  the  gold  standard  system 
everywhere.  The  gold  standard  has  prevailed 
against  tradition,  opinion,  and  prejudice,  because 
it  gave  the  best  superior  fundamental  money,  and 
made  possible  having  at  the  same  time  a  good  sub- 
sidiary money  of  silver.  When  Dr.  Walker  says 
that  no  one  knows  what  the  present  gold  standard 
system  will  come  to,  and  implies  that  it  may  or 
may  not  come  to  disuse  of  silver,  he  shuts  his  eyes 
to  all  the  facts  and  directs  his  imagination  to  an 
utterly  false  possibility. 

205.   ALLEGED   ADVANTAGES   OF  BIMETALLISM. 

Dr.  Walker  starts  from  an  entirely  false  view  of 
how  to  make  gold  and  silver  work  together  as 
money,  and  with  a  not  less  false  view  of  how  to 
secure  the  best  standard,  and  the  best  relation  of 
money  to  prices.  "The  prime  purpose  of  bimet- 
allism," he  says,  "is  to  secure  par-of -exchange 
between  gold  and  silver,"  (p.  242).  More  fully  he 
says  that  "the  chief  advantages  of  successful  bimet- 
allism may  be  stated  under  three  heads." 

"First,  the  establishment  of  an  approximate 
par-of-exchange  between  the  gold-using  and  the 
silver-using  nations." 


230 

''Second,  the  securing  of  a  higher  degree  of  sta- 
bility in  the  compound  mass  of  the  money  thus 
formed  than  could  possibly  exist  with  the  two 
metals  separate  and  independent  in  the  value 
movements.  *  *  *  In  a  word,  the  object  sought 
is  to  make  money  everywhere  a  better  standard  of 
deferred  payments  than  it  can  be  when  it  consists 
of  one  metal  alone.  *  *  *  The  production  of 
the  precious  metals  has  always  been  of  a  highly 
spasmodic  character.  Now  it  is  gold  which  rises 
and  swells  in  volume ;  now  it  is  silver  which  pours 
in  mighty  floods.  If,  then,  each  metal  has  its  value 
in  commerce  subject  to  the  natural  causes  which 
affect  the  supply  and  to  the  commercial  causes 
which  govern  the  demand,  it  is  evident  that  we 
shall  have  an  incessant  fluctuation,  not  only  in  the 
relation  between  the  two  metals,  but  also  in  the 
relation  of  metal  money  to  prices.  Such  fluctua- 
tions cannot,  in  the  nature  of  the  case,  be  sup- 
pressed; but  if  the  two  metals  can  somehow  be 
joined  together  in  their  function  as  money,  it  is 
highly  reasonable  to  expect  that  the  aggregate 
influence  of  fluctuations  in  price  will  be  reduced. 
There  will  be,  on  the  whole,  as  things  are  likely  to 
go,  a  considerable  compensating  effect,  giving  the 
result  of  a  greater  degree  of  steadiness  in  values." 

' '  Such  are  the  two  great  standing  arguments  for 
bimetallism." 

"It  will  be  observed  that  they  are  entirely  inde- 
pendent of  the  (3d)  argument  drawn  from  the  facts 
of  prices,  wages,  and  debts,  as  they  existed  at  the 
time  of  the  demonetization  of  silver,  by  which  that 
metal  was  denied  free  coinage,  and  was  either 


231 

reduced  to  become  the  material  of  fractional  money 
solely,  or  was  allowed  to  be  coined  only  in  limited 

quantity." 

206.   A  WHOLLY   DELUSIVE   SCHEME. 

The  scheme  as  thus  stated  is  a  thoroughly  delus- 
ive  one.  Par  of  exchange  between  gold  and  silver, 
such  as  to  make  them  circulate  together  as  money, 
has  never  resulted,  and  never  can  result,  from  coin- 
age of  the  two  at  a  fixed  ratio.  The  only  way  to 
have  a  perfectly  steady  relation  between  gold  serv- 
ing as  money  and  silver  serving  as  money  is  that 
of  making  the  silver  subsidiary  to  the  gold  as 
standard.  And  this  is  to  the  purpose  of  sound 
finance,  and  of  prosperity  and  progress,  in  India 
and  Mexico  and  China  even,  the  futures  of  which 
are  fast  coming  into  line  with  the  futures  of  Europe 
and  America.  It  is  an  entirely  false  view  that  two 
groups  of  nations  are  to  forever  stand  apart  as 
gold-using  and  silver-using. 

The  expectation  of  a  stability  possible  to  a  com- 
pound mass  of  money  greater  than  can  be  had  with 
the  single  gold  standard,  is  not  the  least  of  the 
delusive  dreams  bred  by  Dr.  Walker's  false  view 
of  money.  If  we  properly  consider  the  gold  values 
and  the  silver  values,  we  are  shut  up  to  the  con- 
clusion that  the  greater  disposition  of  the  latter  to 
fluctuate  must  introduce  into  a  double  mass  of 
standard  money  an  element  of  uncertainty  not 
attaching  to  gold  values.  It  has  been  the  unques- 
tionable superiority  of  gold  in  this  respect  which 
has  brought  it  by  an  irresistible  tendency  to  its 
now  universal  place  as  a  standard  value,  and  that 


232 

in  spite  of  the  fact  that  silver  everywhere  had  this 
place  at  first,  and  has  lost  it  by  failing  to  give 
service  such  as  commerce  requires,  and  such  as 
gold  proves  able  to  give. 

Dr.  Walker  makes  more  than  the  facts  warrant 
of  what  he  calls  the  "highly  spasmodic  character" 
of  the  production  of  the  precious  metals.  There 
is  no  such  character  attaching  to  the  additions  to 
the  world's  supply  of  gold,  nor  even  in  the  case  of 
silver  is  there  anything  like  a  violent  alternation 
of  rise  and  fall.  Gold  shows  itself  so  universally 
and  so  highly  esteemed  that  no  "floods"  greatly 
depress  its  value.  Not  only  has  it  stood  the  test 
of  immense  supply  without  materially  breaking 
down  the  price,  but  a  whole  brood  of  economic 
fictions  hangs  by  the  wild  imagination  that  it  has 
appreciated.  The  case  of  silver,  however,  is  be- 
yond doubt  one  of  prolonged  and  extreme  fall, 
carrying  it  below  the  possibility  of  maintaining 
itself  as  a  fundamental  and  primary  value,  com- 
parable  to  gold  value  as  a  standard. 

207.  "DEMONETIZATION"  TRAGEDY. 

Dr.  Walker  takes  up  "demonetization"  from  the 
action  of  the  Paris  Conference  of  1867,  which  France 
had  called  with  a  view  to  securing  some  scheme  of 
international  coinage,  and  which,  finding  nothing 
possible  on  the  basis  of  both  the  precious  metals, 
came  unanimously  to  the  conclusion  that  interna- 
tional  coinage  must  be  upon  the  basis  of  a  single 
standard,  and  that  gold.  Dr.  Walker's  recital  is 
tragic  in  tone,  and  his  suggestion  of  results  lugu- 
brious to  a  degree.  He  does  not  say,  but  he  sug- 


233 

gests,  that  everything  dire  which  has  befallen  since 
1867  was  with  amazing  recklessness  pulled  down 
upon  their  own  heads  by  the  score  of  nations 
whose  representatives  thought  it  a  fine  "game" 
to  plan  for  a  money  of  all  lands  to  consist  of 
gold. 

' '  In  perfectly  cold  blood, ' '  he  says,  they ' '  declared 
in  favor  of  uprooting  silver  in  countries  embracing 
a  thousand  million  of  human  beings  where  it  had 
immemorially  been  used."  He  is  shocked  to  see 
"financiers  and  currency -tinkerers  undertake  to 
order  up  a  new  monetary  system  for  the  universe, ' ' 
regardless  of  "the  habits,  instincts,  traditions,  and 
prejudices  of  a  thousand  millions  of  men."  The 
universe  of  his  gloomy  imagination  rests  upon 
China  and  India,  the  Straits  Settlements,  and 
Mexico !  ' '  There  was  never  anything, ' '  Dr,  Walker 
exclaims,  "more  against  the  laws  of  nature  and  the 
constitution  of  human  society  than  the  proceedings 
and  the  proposals  of  the  Conference  of  1867.  That 
body  completely  disregarded  the  facts  of  history 
and  the  structure  of  trade  and  industry.  It  took 
no  account  of  the  division  of  the  world  into  two 
great  groups  of  nations,  one  using  gold  and  one 
using  silver.  It  treated  with  contempt  the  instincts, 
the  habits,  the  traditions  of  nations  comprising  a 
thousand  million  people,  the  rate  of  their  wages, 
their  ruling  prices,  the  scale  of  their  exchange 
transactions.  It  proposed  to  rewrite  history  and 
reconstitute  society  in  its  industrial  and  financial 
characters." 


234 
2o8.  DR.  WALKER'S  POSITION  INDEFENSIBLE. 

In  two  most  important  respects  Dr.  Walker's 
position  is  indefensible  and  discreditable.  It  mis- 
represents the  situation  in  respect  of  the  silver- 
using  nations,  and  it  assumes  that  human  progress 
ought  not  to  contemplate  the  advance  of  the  back- 
ward peoples  of  the  world,  of  India  and  China  and 
Mexico,  to  a  thoroughly  developed  condition. 

Dr.  Walker  must  know  that  influences  of  tre- 
mendous efficiency  have  been  at  work  for  a  long 
time  to  reconstitute  the  society  and  rewrite  the 
history  of  India,  of  Japan,  of  China,  of  Egypt,  and 
of  whatever  lands  belong  to  that  level  of  culture  at 
which  the  demand  for  small  money,  such  as  silver 
can  best  meet,  is  both  universal  and  urgent.  India 
alone  is  of  continental  significance  in  its  extent  and 
in  the  immense  section  of  mankind  which  it  forms. 
How  British  India  came  to  the  gold  standard,  of 
necessity  and  to  her  great  advantage,  affords  one 
of  the  most  interesting  and  conclusive  proofs  that 
the  standard  position  of  gold  is  absolutely  final 
both  in  the  experience  of  mankind  and  in  economic 
science.  It  is  in  the  nature  of  things  impossible  to 
shut  off  any  backward  nations  whatever  from  the 
influences  of  human  progress  represented  by  the 
gold  standard. 

209.    HUMAN   PROGRESS   MEANS   GOLD. 

Dr.  Walker  figures,  very  little  to  his  credit,  as  a 
prophet  of  disaster  on  the  ground  that  backward 
silver-using  countries  are  throwing  off  the  tram- 
mels of  tradition,  are  developing  industries  of  their 


235 

own,  are  no  longer  slavishly  following  British  lines, 
and  are  becoming  able  to  have  factories  and  work- 
shops of  their  own,  not  only  meeting  their  own 
wants,  but  raising  them  to  the  level  of  exportation 
of  manufactures  to  their  neighbor  lands  of  the 
East.  To  all  appearance  Dr.  Walker  deprecates 
"the  rise  and  growth  of  new  branches  of  industry 
in  India,  Japan,  and  even  China ;  "  he  says  that 
"  during  the  past  four  or  five  years  the  reports  of 
English  consuls  have  been  full  of  most  unwelcome 
information"  on  this  subject;  that  "cotton  factories 
established  in  Japan  show  an  exceedingly  rapid 
growth;  "  that  "India  has  exhibited  an  increasing 
power  to  produce  for  herself  articles  which  she 
formerly  imported  from  Europe;  "  that  "not  only 
so,  but  Indian  manufacturers  are  already  cutting 
English  manufactures  out  of  the  neutral  silver 
countries  of  the  East;  "  and  that  "even  China  has 
turned  herself  to  manufacture."  The  "influence 
upon  British  and  all  European  trade  and  manufac- 
ture" of  what  the  London  Times  calls  "the  enorm- 
ous advantages  which  the  manufacturers  in  a  silver 
country  enjoy  in  competing  with  gold  countries," 
turns  on  the  alleged  fact,  as  stated  by  the  Times, 
that  in  any  silver  country,  "the  cost  of  the  neces- 
saries of  life  has  remained  absolutely  unaffected 
by  the  fall  in  silver,  and  the  workman  is  there- 
fore quite  content  to  receive  the  same  wages  as 
formerly. 

If  this  representation  were  true,  it  would  simply 
mean  that  a  remarkably  interesting  stage  of  prog- 
ress in  the  East  is  bringing  benfits  to  the  East  at 
some  considerable  loss  to  English  interests.  Does 


Dr.  Walker  want  his  economic  dream  to  persist  at 
the  cost  of  prevention  of  progress  in  the  East?  He 
appears  to  argue  that  his  universally  discredited 
bimetallism  should  be  got  on  its  legs  again  as  the 
only  means  of  holding  down  India  and  Japan,  China 
and  Mexico,  to  the  old-time  dependence  upon 
Great  Britain. 

And  "more  important  still"  than  the  considera- 
tion that  the  vast  East,  and  the  low  culture  lands 
everywhere,  are  stimulated  to  manufacture  for 
themselves,  and  even  for  export,  through  their 
silver  advantages,  Dr.  Walker  pronounces  the  por- 
tending failure  of  British  dominance  generally. 
" English  trade,"  he  says,  "especially  with  the 
Orient  and  with  silver  countries  generally,  has  for 
a  long  time  stood  largely  on  the  basis  of  custom, 
tradition,  and  use."  "These  Eastern  countries," 
he  says,  "if  manufactures  are  once  fairly  estab- 
lished in  them,"  will  become  independent  of  British 
tradition,  custom,  and  use;  "and  the  same  is  true 
in  a  degree,"  he  adds,  "of  Mexico  and  many  South 
American  states." 

If  this  barefaced  appeal  to  British  selfishness  had 
been  made  a  hundred  years  ago  it  would  even  then 
have  been  contemptible  in  science  and  in  view  of 
the  larger  claims  of  human  progress.  It  does  not 
gain  in  moral  decency  from  manifestly  serving  as 
the  desperate  resort  of  a  beaten  cause. 

But  the  assumptions  of  this  appeal  are  not  well 
founded.  Plausible  in  theory  as  the  alleged  stimu- 
lation of  exports  may  be,  the  fact  is  denied  upon 
good  authority.  Mr.  Horace  White  points  out 
that  prices  have  not  remained  unchanged  among* 


237 

the  common  people  of  India,  that  as  silver  has 
fallen  the  silver  price  of  produce  in  India  has  risen, 
that  the  rice  of  Bengal,  for  example,  has  more  than 
doubled  in  price  since  the  silver  rupee  began  to 
decline  in  value,  that  there  cannot  be,  therefore, 
any  permanent  operation  of  the  alleged  silver  situ- 
ation, and  that  at  most  the  manufacturer  has  had  a 
temporary  benefit  through  the  slowness  of  wages 
to  rise  along  with  the  rise  of  prices  of  food  products. 
India,  in  fact,  China,  Japan,  and  Mexico  are  sharing 
in  the  general  progress,  and  the  economic  progress, 
of  Europe  and  America,  and  will  benefit  vastly,  in 
the  end,  by  use  of  the  gold  standard.  India  has 
not  only  hoards  of  gold,  but  a  large  gold  currency ; 
China  and  Mexico  measure  the  value  of  silver  in 
standard  gold  value ;  nobody  has,  and  nobody  wants 
the  two-headed  standard. 


INDEX. 


ABRAHAM,  his  cash  transaction  in  real  estate,  22-24;   gold 

given  first  place,  24-26. 
^GINA,  the  island-seat  of  Pheidon's  earliest  Greek  coinage, 

42,  46. 

ALTGELD,  J.  P.,  his  amazing  financial  screed,  191-198. 
"AMERICAN  INDEPENDENCE,"  false  shyster  notion  of, 

189;  anti-English  fanaticism,  191;  Americanism  of  bastard 

type,  193- 
APPRECIATION  of  gold,  does  not  injure  debtors,   177;  no 

proof  that  it  has  taken  place,   178;   could  not  be   other 

than  a  universal  benefit,  179. 
ARISTOTLE  on  money,  52,  83,  90. 
BABYLONIANS,  use  of  silver  in  chief  place,  16;  their  Uz  a 

city  of  gold  art  and  wealth,  25;   system  of  currency  in 

metal  bars,  45. 

BANKING  and  money,  88;  value  of  sound  banking,  89;  disas- 
trous disregard  of,  by  Secretary  Chase,  101. 

BARTER,  business  by  in  Egypt,  n;  resort  to  instead  of  use  of 
money,  20,  21;  barter  or  trade  the  fundamental  fact  under 
all  money,  63. 

BIMETALLISM,  not  yet  understood,  i;  that  of  the  standard 
and  that  of  money  not  rightly  separated,  2;  gold  bimetal- 
lism by  gold  the  standard  and  silver  subsidiary,  79; 
"What  is  Bimetallism?"  120;  Mr.  Muhleman  on,  121; 
Sidney  Sherwood  on,  122;  W.  A.  Shaw  on,  123;  error  of 
Shaw's  assumption,  124;  money  bimetallism  desirable  and 
possible,  125,  126;  gold  standard 'Bimetallism,  127;  the  true 
bimetallic  interest  that  of  double  money  under  the  gold 
standard,  129;  bimetallism  in  France,  140;  Shaw  on 
French  bimetallism,  142-145;  historic  bimetallism  inter- 
preted from  French  history,  149;  bimetallism  in  the 
United  States,  150;  Alexander  Hamilton's  bad  system, 
[239] 


240 

150;  bimetallism  of  money  practicable,  but  only  under 
monometallism  of  the  standard,  151;  failure  of  Hamilton's 
scheme,  from  making  a  cheap  silver  dollar  sell  out  the 
gold,  152;  the  law  of  1834  threw  out  silver  in  order  to 
secure  gold,  153;  gold  as  standard  from  1873  gave  double 
money,  157-159;  the  Bland  bill  double  standard  scehme, 
159;  its  results,  160;  bimetallism  in  Germany,  161;  double 
money  under  the  gold  standard,  163;  "international  bi- 
metallism" advocated  by  F.  A.  Walker,  204;  his  idea  of  a 
controlling  "  economic  force,"  208;  a  wholly  baseless 
theory,  212;  failure  of  in  France,  220;  false  theory  based 
on  supposed  French  experience,  222;  inadequate  defense 
of,  227;  false  idea  of  advantages  of,  229;  a  wholly  delusive 
scheme,  231,  234. 

BOSREDON,  M.  DE,  report  on  necessity  of  gold  standard  in 
France  (1857),  146. 

BRYAN,  W.  J.,  his  anti-gold  fanaticism,  33. 

CHASE,  SALMON  P.,  Mr.  Lincoln's  Secretary  of  the  Treas- 
ury —  how  he  wasted  our  gold  and  broke  the  banks,  89, 
100-103. 

COINAGE,  a  mere  marking  the  weight,  52,  59;  rules  for  coin- 
age, 60-61;  coinage  of  silver,  78;  work  of  the  mint,  90; 
English  recoinage  scheme  of  1695-99,  134;  coinage  of 
English  silver  suspended  in  1798,  138;  recoinage  of  Eng- 
lish silver  in  1816,  139;  rascal  recoinages  to  cheat  by 
debasement,  141. 

COINS,  the  first  stamped  in  Greece  those  of  Pheidon,  39; 
Lydians  may  have  been  the  first,  46;  origin  of  coins  relig- 
ious, 47-51;  coin  materials  of  various  countries,  58;  full 
value  coin,  65;  fiat  value  coin,  66;  a  necessity  in  cheap 
coins  to  have  the  intrinsic  value  less  than  the  face  value, 
67- 

COPPER,  earliest  money  of  Egypt,  15. 

COWRIES,  African  shells  used  as  jewelry  and  as  money,  17. 

CREDIT  and  money,  87. 

CURRENCY  and  fiatism,  104. 

CURRENCY  contraction,  F.  A.  Walker's  absurd  notion  of, 
207. 


24I 

DOLLAR,  German  honest  money  origin  of,  91;  Spanish  dollar 
declared  the  American  unit  of  value  in  1785,  92;  division 
into  hundredths  first  adopted  in  1792,  92;  Jevons  on  it  as 
"  the  coin  of  a  nation  destined  to  be  the  most  numerous, 
rich  and  powerful  in  the  world,"  92;  failure  of  Alexander 
Hamilton's  dollar,  93;  coinage  of  the  silver  dollar  sus- 
pended by  President  Jefferson,  93;  Hamilton  gold  dollar 
also  a  failure,  94;  false  complaint  of  dollars  now  worth 
twice  as  much  as  formerly,  194-197. 

EGYPT,  early  business  in  by  barter,   ii;  use  of  gold  in,  13; 

silver  in   early   Egypt,    14;   a  gold-silver   compound,  15; 

earliest  money  of  copper,  15;  use  of  African  cowries,  17; 
system  of  currency  in  metal  bars,  45. 

ELECTRON,  or  electrum,  a  gold-silver  compound,  15;  called 
Ionic  gold,  43;  Lydian  use  of,  59. 

ERMAN  on  barter  in  Egypt,  12;  on  silver,  14;  on  electron,  15; 
on  copper,  16. 

FIATISM  and  currency,  104;  fraud  by  fiatism,  108;  early 
American  fiatism,  109;  a  celebrated  French  instance  of 
extreme  fiatism,  no;  the  colonial  fiat  money  craze,  ill; 
its  disastrous  outcome,  112;  fiatist  zeal  for  American  inde- 
pendence, 114;  Continental  fiatist  money,  115;  the  civil 
war  "Greenback"  fiatism,  118;  the  costs  of  American 
fiatism,  119. 

FRANKLIN,  BENJAMIN,  his  protest  against  paper  money, 

119. 
GOLD  BIMETALLISM  the  true  system,  79,  127. 

GOLD,  its  place,  2,  3;  as  a  commodity  or  as  money,  4;  use  of 
in  Egypt,  13;  put  below  silver,  14,  16;  compounded  with 
silver,  15;  Abraham's  daughter-in-law  presented  with  gold 
bracelets  and  ring,  25;  gold  wedding  ring,  26;  Mosaic 
sanctuary  use  of  gold,  27;  gold  of  Solomon's  Temple,  28; 
vulgar  dispraise  of  gold,  31-33;  gold  as  a  rule  of  honesty, 
34;  relative  position  of  gold,  57;  definite  and  decisive 
superiority  of  gold,  60:  gold  makes  the  most  real  money, 
62;  the  best  standard,  62;  gold  value  the  highest  and  stead- 
iest, 63;  gold  metallism,  72;  gold  the  standard,  74,  78;  gold 
commands  confidence,  75;  gold  a  trade  money  in  England 
under  Queen  Elizabeth,  91;  failure  of  the  American  gold 
16 


242 

dollar  of  Alexander  Hamilton,  94;  American  "  Gold  Bill  '* 
of  1834  signed  by  Andrew  Jackson,  96;  desire  and  deter- 
mination to  have  the  actual  use  of  gold  as  money,  97; 
English  conclusion  in  1816  for  the  gold  standard,  106; 
gold  cannot  displace  silver,  130;  early  English  gold,  133; 
new  gold  era  for  England  in  1816,  137;  gold  standard 
reasons,  140;  gold  becomes  the  only  money  in  the  United 
States  in  1834,  154;  becomes  from  1834  the  standard,  in 
effect,  though  not  in  law,  154;  from  1873  gold  only  stand- 
ard, but  with  double  money,  156-159;  German  gold  under 
double  money  system,  163;  demand  of  India  for  gold, 
166,  168;  gold  standard  given  to  India,  169;  wholly  false 
claim'  that  appreciation  of  gold  since  1873  now  injures 
debtors,  177;  gold  has  not  appreciated,  178,  186;  its  appre- 
ciation desirable  every  way,  179;  gold  the  supreme  com- 
modity, 179;  debtors  not  hurt  by  gold,  180;  gold  the 
supreme  servant,  181 ;  use  of  as  money  does  not  cause 
appreciation,  182;  gold  has  come  to  the  supreme  place 
purely  on  its  merits,  186;  gold  on  hire  in  London  purely 
an  advantage  to  us  in  America,  190;  gold  supply  of  United 
States,  197;  ignorant  idea  that  gold  is  doing  double  work, 
200,  201;  criminal  conspiracy  against  gold,  202;  silver  sale 
of  our  gold  under  16  to  i,  203;  gold  value  wrongly  viewed, 
186;  false  idea  of  the  effect  of  a  new  supply  of  gold,  213; 
gold  in  French  monetary  experience,  222-223;  universal 
looking  to  gold  as  standard  at  middle  of  nineteenth  cen- 
tury, 225;  human  progress  means  gold,  234,  237. 

HAMILTON,  ALEXANDER,  his  American  silver  dollar  a 
failure,  93;  also  his  gold  dollar,  94;  his  fundamental  error, 
150;  Shaw  on  his  scheme,  150,  152. 

HARD  TIMES,  the  causes  of,  188. 

HEAD,  BARCLAY,  his  "  Coins  of  the  Ancients  "  —  his  view 
of  Lydian  origin  of  coinage,  41. 

HOLM,  ADOLPH,  on  early  Greek  money,  39~42. 

INDIA,  her  trial  of  silver,  166;  demands  gold,  168;  gets  the 
gold  standard,  169;  injury  done  by  free  coinage,  170; 
demand  for  silver  in  India,  170;  futile  effort  to  hold  up 
silver,  171;  recent  status  of  silver  in  India,  172. 

JEVONS,  F.  BYRON,  in  Gardner  and  Jevons'  "  Manual  of 
Greek  Antiquities,"  on  early  Greek  money,  45- 


243 

JEVONS,  STANLEY,  on  Walker's  views  of  money  as  the 
unsoundest  known  to  him,  7;  on  intrinsic  value  as  the 
basis  of  money,  19;  on  the  natural  history  of  money,  35; 
on  currency  by  weight  the  primitive  system,  52;  on  money 
metals,  54;  on  money  as  a  store  of  value,  87;  on  the 
dollar  of  the  United  States,  92;  on  progress  to  universality 
of  the  gold  standard,  132. 

JONES,  SENATOR  JOHN  P.,  on  gold  as  the  only  honest 
standard,  35. 

LABOR  and  money,  86;  what  labor  wants,  129. 

LATIN  UNION,  formation  of  to  safeguard  a  bad  money  sys- 
tem in  France,  Belgium,  Italy  and  Switzerland,  147. 

LEGAL  TENDER,  colonial  usage  of,  21;  legal  tender  paper 
disaster  of  1862,  100. 

LIVERPOOL,  THE  EARL  OF,  his  epoch-making  "Treatise 
on  the  Coins  of  the  Realm,"  which  brought  England  to 
adopt  gold  as  the  standard  with  silver  subsidiary,  106,  137. 

LOCKE,  JOHN,  his  superficial  definition  of  intrinsic  value,  9; 
advised  making  silver  the  standard,  and  gold  a  trade 
money  by  weight  at  its  current  value  in  silver,  91. 

MASPERO,  his  account  of  ancient  Oriental  money  origins  and 
usages,  Egyptian,  10,  n,  13,  15;  Babylonian,  16;  on  African 
cowries  as  low  culture  cash,  17;  reports  the  mummies 
"  cuirassed  in  gold,"  26. 

MENDELEEFF  on  unique  position  of  copper,  silver  and  gold, 
53- 

METAL  MONETARY  SYSTEMS,  the  world's  29;  J.  H.  Nor- 
man on,  i. 

METALLISM,  the  use  of  a  metal  or  metals  as  money,  64;  the 
chief  problem  of  metallism,  76. 

METALS  as  the  material  of  money,  53;  costly  not  the  same  as 
precious,  54;  relative  position  as  metals  of  gold  and 
silver,  57;  use  of  metals  as  money  does  not  cause  appre- 
ciation, 182. 

MINT,  the  work  of,  90;  American  mint  law  of  1792,  91;  the 
Joseph's-dale  mint  of  the  Count  of  Schlick  set  up  in  1581, 
91;  its  honest  thalers  gave  us  the  word  dollar,  92;  how  the 


244 

American  mint  wrought  for  mischief  and  not  for  benefit,. 
95;  first  American  success  with  silver  coinage  (small  coin 
only),  98;  90  years  of  failure  of  coinage  of  silver  dollars,  99. 
MOSAIC  sanctuary  use  of  gold,  27. 

NORMAN,  JOHN  HENRY,  on  the  "  World's  29  Metal  Mone- 
tary Systems,"  i;  his  conviction  that  the  world  has  no 
science  of  money,  7. 

MONEY  —  the  question  of  needing  new  study,  i;  W.  A. 
Shaw's  two  fundamental  ideas  for  a  perfect  system,  4; 
bad  definitions  of  "  money,"  7;  F.  A.  Walker's  in  the 
Encyclopaedia  Britannica  the  worst,  7,  9;  importance  of 
the  story  of,  10;  science  basis  of,  10;  earliest  facts  of,  10-11; 
intrinsic  value  the  basis  of,  19;  African  cowries  and 
Indian  wampum  as  savage  money,  22;  growth  of  money, 
35;  essential  fact  of,  36;  Horace  White's  general  view  of, 
37;  early  Greek  making  of,  38;  coinage  of  by  Pheidon, 
39-44;  iron,  cast  in  bars,  as  money,  43;  temples  were  the 
sncient  money  centres,  50-51;  ancient  money  was  metal 
by  weight,  51-52;  earliest  current  money,  59;  what  makes 
real  money,  61;  historic  basis  of  real  money,  70;  money 
measures  value,  8i;  it  regulates  exchange,  82;  Aristotle  on 
money,  83;  Horace  White  on  money,  84;  money  as  a 
standard  of  value,  85;  money  and  labor,  86;  money  and 
credit,  87;  money  as  capital,  88;  money  and  banking,  88; 
the  minting  and  issue  of  money,  90;  Sir  Isaac  Newton  on 
money,  135;  England  with  no  good  money  before  the 
1816  change  to  the  gold  standard,  136;  early  French 
money,  140;  French  Revolution  money,  141;  historic  bi- 
metallism of  money  in  France,  149;  money  and  prices, 
173;  Dr.  F.  A.  Walker's  radically  wrong  idea  of  money, 
206. 

PAINE,  THOMAS,  on  paper  money  schemes  as  designed  to 
swindle  creditors,  113. 

PAPER  MONEY,  17  years  of  United  States  paper  money,  102; 
desperate  scheme  of  John  Law  to  make  paper  money 
work  a  complete  failure,  no;  Massachusetts  initiated  a 
scandalous  paper  money  craze  in  Colonial  New  England, 
in;  fearful  spread  of  plague,  113;  untold  ruin  wrought  by 
it,  115-118;  the  civil  war  "  Greenback"  scandal,  118-120. 


245 

PHEIDON,  KING  OP  ARGOS,  the  earliest  Greek  coiner  of 
money,  39-42;  Grote  on  his  coinage,  42;  Curtius  on,  43. 

PLATINUM,  a  noble  metal  not  good  for  money,  56,  68. 

PRICES  and  money,  173;  no  disastrous  fall  caused  by  gold, 
173;  cause  of  decline  in  prices,  174;  effect  of  supply  and 
demand  on  prices,  175;  case  of  cotton,  176;  wheat  prices, 
176;  low  prices  not  true  of  labor,  178;  market  prices  of 
gold  and  silver  not  affected  by  use  as  money,  185;  lower 
prices  not  in  any  way  detrimental,  187. 

RAGUET,  M.,  finance  expert,  1820-1834,  91,  95. 

RATIO,  market  relation  of  such  values  as  gold  and  silver,  76, 
94,  96,  97,  105,  127;  in  France  at  no  time  in  the  present 
century  correct,  142. 

SAY,  M.  LEON,  his  bill  for  making  gold  the  standard  in 
France,  March  21,  1876,  148. 

SHAW,  W.  A.,  "  History  of  Currency,"  3;  his  story  of  all 
countries  driven  to  gold  as  standard  with  silver  sub- 
sidiary, 3;  his  essentials  of  an  ideal  currency  system,  4; 
on  bimetallism,  123;  error  of  his  assumption,  124;  on  loss 
of  English  silver  to  the  money-mongers,  135;  on  want 
of  any  good  money  in  England,  136;  on  the  new  law  of 
tender  for  English  silver  in  1774,  137;  on  suspension  of 
English  coinage  of  silver,  138;  on  its  recoinage,  139;  on 
final  gold  standard  law  for  England,  140;  on  French  bi- 
metallism, 142-149;  on  failure  of  Hamilton's  U.  S.  silver 
dollar,  150;  and  failure  of  Hamilton's  scheme,  152;  on 
gold  secured  by  law  of  1834,  154;  on  silver  in  1873,  156; 
on  results  of  the  Bland  silver  bill,  160;  on  bimetallism  in 
Germany,  161-164. 

SILVER,  its  breakdown  as  standard  money,  5;  American  a 
deserter  from  the  money  field  for  40  years  before  1873,  6; 
silver  above  gold  in  early  Egypt,  14;  Babylonians  gave  sil- 
ver chief  place,  16;  relative  position  of  silver,  57;  silver 
metallism,  71;  special  case  of  silver,  74;  the  true  interest  of 
silver,  77;  silver  used  as  the  common  measure  of  value  in 
England  under  Queen  Elizabeth,  91;  Spanish  silver  dollar 
adopted  as  the  American  monetary  unit  in  1785,  92;  Alex- 
ander Hamilton's  silver  dollar  turns  out  a  failure,  93; 
President  Jefferson  suspends  coinage  of  the  American 


246 

silver  dollar,  a  44  years'  failure  (1792-1836),  93;  silver 
thrown  out  by  President  Jackson,  June  28,  1834,  95;  no 
service  of  silver  as  American  money  during  the  first  60 
years  of  our  mint  (to  1852),  and  even  then  only  small 
silver,  98;  the  silver  dollar  still  a  failure  as  money  until 
1873  —  90  years  of  continuous  failure,  99;  the  English 
law  of  silver,  107;  secure  ratio  for  silver  that  of  intrinsic 
value  below  face  value,  128;  cannot  be  displaced  by  gold, 
130;  advantage  enjoyed  by  silver,  130;  how  silver  lost 
first  place,  131;  the  gold  standard  will  help  silver,  131; 
early  English  silver,  133;  the  money-mongers  got  the 
silver,  135;  a  law  of  tender  applied  to  English  silver,  137; 
English  coinage  of  silver  suspended  in  1798,  138;  recoinage 
of  English  silver  in  1816,  139;  the  silver  incubus  in  France, 
142;  fatal  drop  of  silver,  144,  147;  drove  France  to  the  gold 
standard,  148;  complete  failure  of  American  silver,  153;  its 
position  reduced,  154;  discredited  as  a  standard,  155;  not 
"  demonetized  "  in  1873,  156;  as  money  made  secure  under 
gold  standard,  157-159;  Bland  bill  silver  scheme,  159; 
silver  in  German  double  money  gold  standard  system, 
163;  later  German  silver  interest,  164;  India's  trial  of  silver, 
166;  injury  done  in  India  by  free  coinage;  demand  in 
India  for  silver,  171;  present  status  of  silver  in  India, 
172;  price  of  silver  not  affected  by  use  as  money,  183; 
silver  has  given  place  to  gold  solely  on  the  merits  of 
gold,  186;  possible  peril  in  silver,  216;  France  forced  to 
drop  silver,  218;  silver  as  a  standard  in  France  dealt  a 
fatal  blow,  224;  extreme  fall  of  silver  has  ruled  it  out  as  a 
possible  standard,  232;  silver-using  nations  changing  to 
gold,  233-234,  237. 

SOLOMON'S  TEMPLE,  gold  used  for,  28-29;  he  sold  bonds 
and  bought  gold,  30;  his  demonetization  of  silver,  30. 

STANDARD,  the  most  satisfactory,  62;  legal  fiat  and  the  stand- 
ard, 105;  the  English  law  of  standard,  106;  bimetallism  of 
the  standard  impossible  of  good,  122,  125,  127;  gold  stand- 
ard bimetallism,  127;  double  standard  perils,  French 
experience  of,  145;  France  finds  the  gold  standard  a  neces- 
sity, 146;  final  French  adoption  of  the  gold  standard, 
148;  double  standard  did  not  give  France  double  money, 
220;  silver  as  a  standard  overthrown  in  France,  224;  uni- 
versal need  of  gold  standard,  237. 


247 

STEWART,  W.  M.,  on  gold  as  the  true  universal  standard,  34. 

UPTON'S  "  Coin  Catechism,"  2;  on  dismal  failure  of  American 
effort  to  have  coined  money,  94;  our  mint  "  a  most  ridicu- 
lous "  failure,  95;  on  the  design  of  the  bill  of  1834  to 
throw  out  silver,  96;  on  American  first  money  success 
after  80  years  of  failure  (1776-1856),  98,  99;  on  the  17 
years  of  fiat  paper  money  due  to  Mr.  Chase,  102. 

VALUE,  Locke's  superficial  definition  of  intrinsic,  9;  articles 
employed  as  money  on  basis  of  intrinsic  value,  21;  this 
the  sound  money  basis,  59,  61;  what  value  consists  in,  62. 

VIENNA  convention  of  1857  gave  Germany  only  silver  money, 
162. 

WALKER,  F.  A.,  his  exceptionally  unsound  views  of  money, 
7;  his  "  International  Bimetallism,"  204;  gold  value 
wrongly  viewed,  205;  radically  wrong  idea  of  money,  206; 
absurd  notion  of  currency  contraction,  207;  idea  of  a 
regulating  economic  force,  208;  fundamental  error,  210; 
wholly  baseless  theory,  212;  false  estimate  of  effect  of 
new  supply  of  gold,  213;  proof  of  incompetence  as  a  bi- 
metallist,  216;  theory  based  on  supposed  French  experi- 
ence, 222;  errors  of  his  argument,  224;  used  mistakes  of 
economists  for  proofs,  226;  makes  an  inadequate  defense 
of  double-headed  bimetallism,  227-230;  a  wholly  delusive 
scheme,  231;  false  complaint  of  action  of  the  Paris  Con- 
ference of  1867,  232. 

WAMPUM,  Indian  shell  heads  used  as  jewelry  and  as  money, 
18;  two  kinds  of,  white  and  black,  19,  20;  currency  of  in 
American  colonies,  109. 

WEBSTER,  PELATIAH,  his  story  of  the  demon  of  fiat  money 
in  American  Revolutionary  times,  116. 

WEDDING  RING,  the  gold,  26. 

WHEAT  PRICES,  cause  of  change  in,  176-177. 

WHITE,  HORACE,  his  book  on  "Money  and  Banking,"  4; 
his  conception  of  "  money  a  commodity,"  4;  does  not  seem 
to  sufficiently  recognize  need  of  silver  money,  6;  his  gen- 
eral view  of  money,  37;  Mr.  White  on  gold  not  absolutely 
stable,  63,  note;  his  definition  of  money,  84;  his  explan- 
ation of  gold  as  a  basis  of  credit,  88;  on  American  coinage 
failure,  94,  95;  on  the  "Gold  Bill"  of  1834  signed  by 


248 

President  Jackson,  96,  97;  on  the  paper  money  plague  in 
early  New  England,  113-118;  on  early  American  legal 
tender  laws,  117;  on  the  "  Greenback  "  fiatism  of  Secre- 
tary Chase,  118;  on  recent  German  movements,  166;  on 
the  French  commission  of  1857,  218;  on  the  failure  of 
bimetallism  in  France,  220,  221 ;  on  prices  in  India,  236. 


O 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
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APR  23  1947 

4Mar'49PA 

200ct'49JG 

!3Ma.'       ,  „ 


13M 


LH 


APR  16  1956  L» 


REC'D  LD 

JAN  J  3  1959 

APR  30  1979. 
<EC.  cm.    APR.   7 

MUL101988 

:;ov  30  '88 


LD  21-100m-12,'46(A2012sl6)4120 


YC  24056 


M223478' 


3.) 

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